Greater support is needed for those approaching retirement, Wealth at Work has warned, after a poll from the group revealed that the majority (84 per cent) of employers believe that employees have changed their retirement plans in light of the pandemic.
The provider emphasised that the pandemic has affected “nearly all of us, and not least those employees who are approaching retirement”, suggesting that it comes “as no surprise” that nearly all respondents expect employees to change their retirement plans as a result.
In particular, Wealth At Work director, Jonathan Watts-Lay, explained that redundancies have lead to many individuals deciding to retire early and therefore access their pension for perhaps the first time.
Indeed, a survey from LV found that more than 154,000 people aged 55-64 have opted for early retirement because of redundancy and reduced income.
Watts-Lay also noted that some savers have had to delay their retirement plans to rebuild their pension pots that have been adversely impacted by market fluctuations, with research from Fidelity indicating that 38 per cent of furloughed workers have also had to delay retirement.
“Employees who are facing retirement are probably feeling concerned if they can afford to do so at the moment,” Watts-Lay acknowledged, noting that greater financial support and education could help to address this issue.
He stated: “Financial education could help them realise that they could use the tax-free cash from their pension to pay off any outstanding loans and mortgages, and without these debts they may not need as much as they think to afford retirement.
“For organisations that are making redundancies, affected staff should receive appropriate support so they understand how it will impact their finances, including how to budget, manage debt and cut down on spending and bills.
“Support will also be needed around understanding how much of their redundancy pay will be received after tax, how to make it last if they don’t get a new job quickly, or how retirement could be an affordable option when perhaps they thought it wasn’t.
“With many retirement plans up in the air, financial education, guidance and access to regulated financial advice is needed now more than ever.
“Many leading employers and trustees are putting robust processes in place to ensure that this support is available for the workforce. This can help employees become more financially resilient and lead to better outcomes for all.”
The findings also follow research from the Pensions Management Institute (PMI) and Wealth at Work, which found that the guidance and advice being made available to members was on the rise amid trustee concerns that savers might not be supported enough.