Millions cut or stop pension payments because of Covid

A new report shows that more than 5.5 million saves have either stropped or reduced their pension payments because of the financial effect of the pandemic.

The report by Scottish Widows also claims that savers will have to work longer to make up pension shortfalls if they want to fund a comfortable retirement.

Boost

The firm suggests that if the government wants to boost retirement income it should tweak auto-enrolment pensions, including rolling them out to the self-employed.

The minimum age for taking part should be reduced from 22 to 18 to give people more time to save and employer contributions should be maintained even if the saver drops out of the scheme.

The report includes a table to show the effects of various actions:

Gender gap

The report warns that the pandemic might also have the effect of widening the gender savings gap ‘after years of progress’.

Women are more likely to work in the sectors of the economy worst hit by the coronavirus like hospitality and retail where pay is lower and part-time work more common.

Record high

The report found pension planning for women had reached a record high in the year to April with 59% of women saving adequately, just 1% behind men.

Spokeswoman Jackie Leiper said: “The livelihoods of millions of people are at stake as the government seeks to navigate a way out of the current crisis.

But the evidence in this report suggests this threat is even greater for many groups of women.

Urgent action is going to be required to limit the damage on their livelihood and longer-term prospects.”

Cut back

Elsewhere a new report from Premium Credit shows one in five consumers have either cancelled or cut back on insurance during the pandemic.

Policies affected included life and health insurance.

Spokesman Andrew Morghem said: “The financial pain of Covid for millions of households is mounting and insurance is one of the bills that people are cutting back on to save money.”

Taking risks

The report adds that consumers are taking risks with their finances as 44% pay their premiums with their credit cards and are using an average of £520 more credit than a year ago.