Covid has forced low-wage workers to forego £122 million in employer payments.
PENSION issues triggered by the pandemic are still plaguing savers, according to new research from Scottish Widows, with low-income people being the hardest hit. As a result, improvements to automatic enrollment (AE) have been proposed to ensure that retirees are protected.
Pension savings are currently struggling, according to Scottish Widow’s annual Retirement Report, which shows that the UK’s lowest incomes have missed out on an estimated £122 million in employer contributions. This is the outcome of the pandemic’s employment and income losses, and many people are now confronted with a “difficult choice” between paying bills and saving for the future.
According to the report, which has been tracking the nation’s attitudes toward retirement savings since 2005, 31 percent of low-income earners, defined as those earning £10-£20,000 per year, have suffered financial hardship as a result of the pandemic, and 23 percent now expect to have to “work until they drop.”
Low earners would have missed out on a total of £122 million in pension contributions from their employers during COVID-19 as a result of job and income losses, according to Scottish Widows, a figure that nearly triples to £325 million when personal payments are factored in.
In light of these findings, Scottish Widows is advocating for “urgent reforms” that would allow low-income workers to continue receiving contributions from their employers even if they are unable to cover the costs of employee contributions during a period of financial hardship.
Scottish Widows’ Head of Policy, Pete Glancy, had something to say about it.
“COVID-19 has had a significant impact on the nation’s finances, particularly on individuals who were already in financial difficulty,” he stated.
“Those who work from home save money on commuting and other expenses, allowing them to increase their savings.
“However, individuals on lower salaries – and those who were less inclined to work at home during the epidemic – have been hard impacted financially and are relying on savings to cover expenses and short-term needs.”
“Despite the obstacles posed by the pandemic,” Scottish Widows stated, “there is some cause for optimism,” as the proportion of people saving appropriately for retirement – those putting away the recommended minimum of 12 percent – hit a new high of 61 percent this year.
Younger savers were mostly responsible for this, with six percent more 30–39-year-olds currently saving appropriately than last year.
This was due, according to Scottish Widows. “Brinkwire News in Condensed Form.”