The pandemic might force some over 50s to delay retirement, while ill health is pushing others into early retirement without enough saved
by Bethan Rees
Research from Legal & General Retail Retirement finds that the Covid-19 pandemic could be increasing rates of retirement inequality in the UK, according to Rozi Jones for Financial Reporter.
The research, writes Jones, finds that 41% of respondents aged over 50 (and not already retired) have had their career and retirement plan impacted by the pandemic, and 10% of people in this age group (1.45 million) "expect to delay their retirement by an average of three years" due to pandemic-related financial setbacks. Of the pre-retirees, 20% "anticipate they will need to continue working indefinitely" because of Covid-19's impact.
Household income has decreased by £500 per month on average due to the pandemic for 34% of respondents aged over 50, writes Jones, and the shift in household finances has forced some to adjust their monthly retirement savings. Jones reports that 68% of people aged over 50 (who are still working) have seen a direct hit to their retirement savings, with 13% saving less towards it.
Andrew Kail, CEO, Legal & General Retail Retirement, is quoted in the article. He says: "Across the board, we are seeing increasing evidence of income inequality. On the one hand, we have seen the number of people on Universal Credit double, while others have seen their savings reach new highs, according to the Bank of England. As our research shows, for the older generation that has prompted some people to take early retirement, while some are left questioning whether they will have to stay in work indefinitely."
Financial Reporter article
Ill health is affecting retirement age
It's not just the pandemic that's having an impact on retirement age. One in eight people in the UK are being forced out of the labour market before they reach state pension age, due to ill health, according to research by the Trades Union Congress (TUC), as reported by Aamina Zafar for FT Adviser.
The TUC report, Extending working lives: how to support older workers, published 12 March 2021, finds that 11.8% of people in the 60–65 age group (534,876), had to leave the workplace due to long-term sickness or injuries in Q3 2020. The TUC says that many are being "consigned to poverty" because of ill health.
The report reveals an income and class divide too, finding that people who leave "the labour market early while working in low-income jobs – such as cleaning, care and manual labour – were six times more likely to quit due to medical reasons than those in higher-paid jobs", writes Zafar .
Frances O’Grady, general secretary at TUC, is quoted in the article. She says that "many older workers are being forced to stop work earlier due to ill health", arguing that "the government should stop plans for further rises in the pension age and focus on improving support for people who are too ill to work".
Zafar says the TUC is calling on the government to work with unions and employers to develop training programmes for older workers, so those in physically intensive jobs can retrain to extend their working lives.
FT Adviser article
US women and retirement
In the US, discussions on the issues facing women in saving for retirement took centre stage at the Pensions & Investments' Defined Contribution Spring Virtual Series from 8 to 11 March, according to Margarida Correia in a Pensions & Investments article.
"With the pandemic bringing those issues into sharp relief, talk centred on the 'shecession', a reference to the Covid-19-triggered exodus of women from the workforce as they wrestled with the lack of childcare options," writes Correia.
On the first day of the conference, which fell on International Women's Day, speakers "lamented the departure of women from the workplace", which is damaging women’s retirement security and the gender diversity efforts of their workplaces. The speakers referenced a report from the Center for American Progress, a non-partisan think tank, which estimates that women's total lost wages would equate to US$64.5bn per year, if the levels of "maternal labour force participation and work hours experienced during the April 2020 first-wave peak of infections were to persist long term".
In the conference's opening keynote speech, Michael Madowitz, a Washington-based economist with the Center for American Progress, spoke about how the challenge of childcare could create opportunities to encourage women to save for retirement. Madowitz is quoted as saying that pension plan sponsors should connect with people over problems such as childcare that are "a little outside the standard retirement framework".
He suggested using an interactive calculator that shows the impact on long-term retirement savings for women who take a childcare break from the workforce. "The calculator showed that a 29-year-old woman earning US$44,000 who took a two-year leave from the workforce to care for a child would forgo a total of US$302,809 in lost wages, wage growth and retirement assets over the woman's entire working life," Correia writes. Adding tools such as this could help people engage more with their retirement plans, Madowitz explained.
The conference also heard discussions around the topic of the pandemic increasing participant engagement with retirement plans, plus "greater interest in educational webinars and one-on-one meetings, even when offered digitally rather than in person", writes Correia.
Pensions & Investments article
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