A new survey by Scottish Widows covering over 5,000 UK adults has revealed over half of over 50s (53%) fear they will run out of money in retirement due to the impact of the pandemic on their income and their ability to save.
23% of the group asked where the most likely of any age group to face job and income losses during the pandemic.
The survey also saw a rise of 10% of over 55s that dipped into their pension during the pandemic to make ends meet.
Scottish Widows wants to see action to help older workers save again into a pension if they have had to withdraw some of their pension but want to re-enter the workforce later.
The pension provider warns that after withdrawing some of your pension can cause unexpected tax bills for anyone planning to re-join the workforce.
Many savers that dip into their pension early will face Money Purchase Annual Allowance (MPAA) which will restrict future pension contributions to £4,000 per year and make rebuilding your pension difficult.
In the first 3 months of 2021, numbers rose sharply of over 55’s dipping into their pension to 383,000.
The latest Scottish Widows Retirement Report is due to be published soon and will reveal 37% (1 in 3) people have taken a hit to their finances during the pandemic which is more than any other age group and 13% believe they will never be able to afford to give up work.
Within the survey, 17% of people in their 50s were self-employed compared to only 12% aged between 25-49 years old. More than half of those self employed had seen their finances suffer compared to 25% of permanent employees.
Alongside Scottish Widows, we urge the government to revisit MPAA rules and for them to be temporarily suspended for older workers to help to get their savings back on track during these extraordinary times.
We can only do so much, it is government and regulators that should promote awareness of the MPAA being triggered if you dip into the 'taxable' i.e. 75% of your pension fund (the 'crystalised' fund), when 25% pension commencement lumps have already paid out tax free in UK.