News & Insight

How will a COVID-19 second-wave impact pensions?

covid 19 woman and man wearing mask retirement

With COVID-19 cases on the rise as we enter the second wave, the markets still recovering from the initial impact of COVID-19 and inflation hitting a 20-year low, there’s a wide range of questions about pensions and retirement that need answering.

We caught up with one of our financial planners, Luke to talk through some of the key questions surrounding the long and short term impacts of a second wave on the pension market and hopefully give you the peace of mind in these uncertain times.

What impact will covid have on pensions?

It’s going to depend on if we have full national lockdown again or regional ones. If it’s a national lockdown, we’ll see an immediate effect on consumer spending and on perceived demand.

Issues relating to a second wave are that it creates uncertainty and markets dislike nothing more than uncertainty.

Recovery of the markets is still yet to reach pre-COVID levels, with Professor John Turner, a financial expert from Queen’s Management School in Belfast, claiming the market is 25% down since the start of the year.

We’ve seen the markets improve since the announcement of the two COVID-19 vaccines, which will put a lot of people’s minds at ease. Since October, the FTSE has gone up by more than 500 points, giving the nation a lot more confidence when it comes to the markets and whether or not we’ll see a strong recovery.

What impact will a 20-year low inflation have on pensions?

You might well find that it’s going to drive people away from annuities. Annuities are in part linked to inflation-linked bonds called gilts. When inflation is low, you get less for your money and have to accept a lower rate of return.

There’s a huge benefit to lower inflation; your money goes further. This means that you can enjoy spending more without having the cost of an inflation increase to also consider.

What you’ll find though is that next year’s State Pension increase might be based on inflation and it must go up by the lower of 2.5% inflation or household earnings growth.

Both of these are likely to be low in the near future, so the State Pension is unlikely to rise by 4% like it did this year.

Have we seen more scams in the industry?

We saw earlier this year that The Pensions Regulator (TPR), Financial Conduct Authority (FCA) and Insolvency Service all issued warnings about an increase in scam activity after the COVID-19 outbreak.

It can be tough to spot scams, but your best bet is to see if someone is authorised and regulated by the Financial Conduct Authority.

It’s also worth remembering that anything or anybody offering you the chance to take your pension before the age of 55 is almost sure to be a scam.

Always seek impartial advice and check to see if the company in question is listed on the FCA Register.

This lets you see all regulated and licensed financial advisers in the UK, giving you further peace of mind when it comes to choosing who to go to for advice specific to your individual circumstances

What should people consider when deciding how to access their pensions for retirement?

Annuity rates and the stock markets are quite low at the moment, as such your retirement pot might be lower than you were expecting.
Research by MoneyTalk has shown that Annuity rates have fallen by more than £1,000 over the last decade, which could impact anyone looking for a guaranteed source of income in retirement.

With all the uncertainty in the markets at present and a second-wave looming, now is an excellent time to talk to a financial adviser about your retirement options, available funds and any concerns you might have.

Lifestyle Financial Planning could help you truly unlock your money and retirements’ potential by showing you how to use your pension and other assets to fund the life you want in retirement.

So, to get started on your journey to retirement, you can take our free no-obligation first meeting.

You’ll be able to speak with our financial advisers who can explain our PlanHappy Lifestyle Financial Planning process, how it can help you, but most importantly, you can work through what it really is you want to do in retirement.

You tell us what you want to do, you tell us your goals and aspirations, and then we start your journey to retirement.

   Retirement Savings – how much you need to save for retirement
   Retirement Date – when you can afford to stop working
   Retirement Income – how much you can spend in retirement

So, if you’re looking to make sense of pension and retirement planning options with straightforward financial planning advice, we’re here to help.

Contact our friendly team on, 033 0133 3035 or click here to arrange a call back from one of our experts.

Joslin Rhodes Pension & Retirement Planning – Real Advice, For Real People

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