The uncertainty caused by the Covid-19 (Coronavirus) pandemic means it is a crucial time for employers to support the financial wellbeing of staff. When it comes to concerns about pensions, employers should encourage staff not to panic and make rushed decisions without understanding all of the facts.
For employees with defined contribution pensions, the impact of the virus on the financial markets and therefore on pension savings, means that people may worry that the value of their pension pot has gone down. However, investments are designed to deliver over the long-term and historically financial markets have recovered over time. If employees are concerned about where their money is invested, they should speak to their providers or check their scheme information.
Employees who are approaching retirement will probably be concerned about how the pandemic could impact their savings. Those who were looking to retire could find their savings have reduced, and this may mean having to accept a lower retirement income, or if possible, consider postponing their retirement and giving markets time to recover. Employees facing particular hardship may consider accessing their pension earlier than intended.
For workers with defined benefit pensions who may have concerns or be considering transferring their pension, employers should signpost them to speak to a regulated adviser or seek guidance from The Pensions Advisory Service to talk through their options before making any decisions that could have implications in the long-term.
Unfortunately, the current market’s uncertainty means scammers could try to encourage people to cash out of their pensions. Employers should advise staff to be on alert for the warning signs of scams and direct them to the ScamSmart website to find out more.
Whether in defined benefit or defined contribution schemes ,we would urge people to stop and think before making such decisions, and seek impartial guidance or advice about options open to them. They can contact The Pensions Advisory Service or those aged over 50 can book a Pension Wise appointment online.
Carolyn Jones is head of pension policy and strategy at the Money and Pensions Service