The Pensions Policy Institute (PPI) has published a report which found that policies aimed at improving the retirement outcomes of underpensioned groups will be most effective if they consider how the negative labour market effects disproportionately impacted them during the pandemic.
The report called: ‘What impact has the covid-19 pandemic had on underpensioned groups?’, identifies low employment rates and income levels, low financial resilience, saving behaviours and accessing pension savings as the short-term impact of the pandemic while unemployment following the end of the government furlough scheme, an increase in remote working, changes to the state pension triple lock and health and life expectancy as the long-term impact.
According to PPI research, over 2020, 38 per cent, equivalent to 20 million adults, saw their “financial situation overall worsen” as a result of covid-19 and 15 per cent have seen it “worsen a lot.” Self-employed people, households with incomes less than £15,000 per year, and BAME adults are the hardest hit. Women, particularly single mothers and divorced women, people of colour, disabled people, caregivers, multiple jobholders, and the self-employed, are most at risk of poor retirement outcomes.
The report explores the immediate impact that the covid-19 pandemic has had on underpensioned groups. The short-term impact includes the drop in employment rates, including levels of part-time employment and the use of the government’s job retention scheme (furlough), which has disproportionately affected these groups. Income levels have decreased more for underpensioned people on average and financial resilience, including the ability to keep up with bills, savings, and debt, is lower among these groups and has led to more hardship due to the pandemic. Underpensioned people have struggled more on average with the affordability of- and individual saving behaviour relating to pensions during the pandemic. Additionally, they may have found it more challenging to avoid accessing pension savings during the extreme investment volatility experienced during 2020.
Some of the potential long-term effects of the pandemic on underpensioned groups include increased unemployment due to the end of the Government Job Retention Scheme, the potential consequences of increased remote and flexible working, the impact of changes to the State Pension Triple Lock, which most underpensioned groups will likely to rely on, and the long-term impact on health and life expectancy.
