The pandemic has affected almost everyone in myriad ways, whether medically, socially or financially; its death toll has been appalling and overshadows all other consequences. The vast majority have fortunately come through the pandemic, but the speed of recovery from its consequences has been variable.
Medically, many patients have recovered well, but some with prolonged symptoms have been diagnosed with ‘long COVID’. It’s a similar picture financially, as many people have lost earnings or even their jobs, but economic recovery could help restore their financial health. A minority, however, may suffer the financial equivalent of long COVID.
Insurer and pension provider Legal & General (L&G) has monitored the financial effects of COVID-19 during the pandemic, particularly the long-term impact on the prospective pension income of workers over 50 and thus closest to retirement. In the early months of the crisis, the picture wasn’t too disturbing; last August, only 2% of this group envisaged cutting their pension contributions.
Fast-forward eight months to April this year, when L&G research revealed that some 12% of workers over 50 were paying less into their pension pots because COVID-19 had disrupted their finances. This led L&G’s number-crunchers to work out just how severe the impact could be on the retirements of those one-in-eight (about 1.7 million) 50-plus workforce members.
The message from L&G’s figures is simple: anyone, whether over 50 or under, who has economised on pension contributions during the pandemic should restore them as soon as they can. To give L&G the last word, “A 50-year-old opting out of a workplace pension could be £50,000 worse off by the State Pension age of 67 if they never opted back in and continued working full-time throughout.”
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.