Financial effects of COVID

The pandemic has affected almost everyone in numerous different ways, whether that is financially, medically, or socially; its death toll has been appalling and overshadows everything. Fortunately, the vast majority have come through the pandemic, but the speed of recovery has been variable.

Medically, many patients have recovered well, but some have prolonged symptoms which have been diagnosed as ‘long COVID’. A corresponding picture emerges with people’s finances, 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) monitored the financial effects of COVID-19 throughout the pandemic, particularly the long-term impact on the prospective pension income of workers over 50 who are closest to retirement. In the early months of the crisis, the picture wasn’t too disturbing; in August 2020, only 2% of this group envisaged cutting their pension contributions.

What are the numbers?

When the research was undertaken again in 2021, L&G revealed that almost one in eight (12%) of workers over 50 were paying less into their pension pots because COVID-19 had disrupted their finances. These findings show that workers over 50 decreased their pension savings by £142 a month on average, which for many people who pay into their workplace pension, equates to stopping contributions all together, often with no idea on when they may be able to restart payments. 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, ‘A 50-year-old opting out of a workplace pension could be £50,000 worse off by the State Pension age of 67 and more than £65,000 worse off by the age of 70, if they fail to start saving again and continue working full time until their retirement. ‘

If I can afford to, should I kickstart my pension?

If you have cut back on your pension contributions during the pandemic, ask yourself whether you can restart them as soon as possible. Even a small regular contribution can make a big difference in the long run and wherever possible you want to avoid the financial equivalent of long COVID.

Can we help you?

Baffled about pensions? Not sure what the best thing is to do? Ask us for help. We love helping people get the best out of their money.

Here are a few of the reasons you might want to give us a go.

• The personal touch. We go out of our way to understand you, your life situation, and what you want.
• We really know our stuff. We’ve got over 50 years’ experience of helping people plan and achieve the retirement they want.
• We’re completely independent and unbiased. 
• Your first consultation is on us.

We can help you plan the retirement you want, so you can get on with enjoying life without having to worry about money – now or in the future.