Millions of pension savers across the country are concerned about the state of their finances.
Since lockdown began in March, the government’s protective measures have supported both employers and employees through a difficult time. As these measures begin to be eased back, there may be a higher possibility of company insolvencies, and thus reduced financial security for pension savers.
The debate about the sustainability and security of UK retirement savings has been ongoing for some time. YouGov research suggests that significant concerns existed among UK savers prior to the Covid-19 crisis, with 73 per cent of retirement savers worried about the safety of their savings at the end of last year.
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Since the pandemic emerged, we’ve seen a steady flow of calls from savers concerned about their pension pots, indicating that these worries aren’t likely to ease off in the near future.
As campaigns by the Financial Conduct Authority and other official bodies have highlighted, public concern about the security of pensions can lead to poorly advised decisions on retirement savings, and also make people more susceptible to pension scams. It’s this chain reaction that we must work towards preventing.
There has never been a more important time for the industry to collaborate and work together to maintain trust in the current system.
Supported by the pensions minister, Guy Opperman, we recently worked with six of our industry partners to produce a co-created guide, entitled “Covid-19 – Where to get help”, for pension savers to address some of the key questions and concerns at the moment. Our partners in this guide were the Financial Services Compensation Scheme (FSCS), Money and Pensions Service (MaPS), The Pensions Regulator (TPR), the FCA, and the Pensions Ombudsman.
By cooperating with partners across the industry, we have been able to provide a simple single response to a number of questions that exist surrounding people’s pensions. Rather than taking a siloed approach, we are working together to give people confidence in the security of their long-term savings, despite the challenging picture that we’re seeing today.
We have seen a range of common questions regarding pensions. What happens to my pension contributions if I am on furlough? Is my pension protected if my employer becomes insolvent? And how can I protect myself against pension scams?
For many trustees, employers and industry bodies, these are everyday, familiar questions. But for a large proportion of savers, these are new issues that are fuelling financial anxiety.
The information is easy for members of pension schemes to access and we know that employers and pension scheme trustees will want to share the guidance materials available as they support and reassure their members. Understanding the many protections already in place will hopefully help pension savers make the right choices going forward and minimise their susceptibility to scams and bad advice. For example, not everyone knows that there’s free, independent guidance available through the Pensions Advisory Service and Pension Wise.
This is just a starting point. We strongly believe that the broader industry can continue to work together with trustees and sponsoring employers, to continue to reassure pension savers and maintain trust in saving for retirement in the UK, during and after this pandemic.
It remains to be seen what an economic recovery will look like in the UK, but the information to help pensions savers is out there — and you can find out more here.
Main image credit: Getty