Scottish Widows has published its 2021 Retirement Report, exploring the impact Covid has had on retirement savings.
Frontier have supported the publication with analysis of survey results and their implications.
The report explores the nuanced and polarising impacts of the pandemic on long-term savings. Three key findings emerge:
- There has been remarkable resilience in retirement savings, though inequalities remain entrenched and appear unlikely to change without further government action.
- A large minority have experienced a major blow to their finances. Many are exiting the pandemic without a job, with less income and more debt. The impact is widespread, but adverse financial impacts are particularly common amongst the self-employed, low earners and perhaps most surprisingly, those in their 50s.
- Others are emerging from the crisis with unexpected financial resources, with forced reductions in spending from lockdown supercharging savings and debt repayments. The silver lining from the crisis is most appear to be using these extra resources to build up their financial resilience.
This leaves a complex landscape for policy makers to deal with. The report identifies a range of short and longer-term policy priorities to support long-term savings. Short-term priorities include support for those struggling, raising awareness around advice and guidance for those with newfound financial resources, and adjustments to automatic enrolment, such as reducing contribution thresholds, to boost savings for all. Longer-term priorities focus on deeper reforms to automatic enrolment, including raising default contribution rates, in order to close persistent inequalities in long-term savings.
Frontier regularly advises on issues in the financial services sector and public policy issues.
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