Pension coronavirus warning: UK workers to be forced to defer retirement for ‘some years’

The coronavirus outbreak is expected to shed billions off the British economy as stock markets across the world continue their negative downturn because of the pandemic. The London stock market plummeted nearly 11 percent last week and the tumble has continued in spite of the British Government launching new emergency measures in an attempt to salvage the economy from COVID-19 fears. Asked whether the coronavirus could have an impact on pension pots with a strong connection to the stock market, Royal London’s Barry O’Dwyer told the Today Programme: “Most financial advisers will have moved their clients out of equities earlier.

“In fact, if you have invested in a workplace pension, typically, your provider will have moved you out of equities into bonds as you came towards retirement.

“So that shouldn’t happen if people have stuck with the default fund or have taken financial advice.

“But there will be some people and it may well be those people have to replan their retirement, perhaps defer their retirement for a couple of years.”

Last week, the Bank of England cut the base rate by 50 basis points, from 0.75 to 0.25.

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The temporary measure was announced hours before the Chancellor of the Exchequer Rishi Sunak delivered the 2020 Budget.

Steven Cameron, Pensions Director at Aegon commented: “We hope the emergency 0.5 percent cut in the bank’s base rate will support businesses and consumer confidence through the coronavirus crisis.

This should reduce the cost of borrowing for businesses and individuals during what we hope will be a short term period of disruption.

“It does, however, pose particular challenges for those approaching retirement.

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“The recent fall in the stock market will mean those whose pension is primarily invested in stocks and shares will have seen their pension pot fall in value.

“The reduction in interest rates creates a double whammy as annuity rates are also likely to be cut.

“As a result of the pension freedoms, individuals with defined contribution pensions now have flexibility over when they start taking a retirement income and can choose to remain invested, drawing an income, rather than buying an annuity.

“While there is no guarantee around if and when fund values and annuity rates will bounce back, individuals about to retire might want to seek advice on their options, including potentially deferring locking into annuities at a particularly adverse point in time.”


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Responding to a caller concerned about his pension pot because of the coronavirus pandemic, financial adviser Martin Lewis suggested having a “widespread” investment plan may help pensioners and workers approaching pension-age ensure their money is protected.

Mr Lewis said: “Well, if you’ve got a nice widespread you shouldn’t lose it all.

“The most important thing to say is, if you’ve just invested, I hope you’ve invested in the long term.

“That’s what you do when you put money in stocks and shares, it’s a five-years minimum investment.”

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