Is coronavirus forcing you to retire later? Tell your pension provider
Older members of workplace pensions are urged to take action if coronavirus forces them to delay their…
23rd July 2020 11:56
by Rachel Lacey from interactive investor
Older members of workplace pensions are urged to take action if coronavirus forces them to delay their retirement plans
More than seven in 10 of those wanting to retire before 2025 now cannot due to the coronavirus outbreak, and are urged to contact their pension provider to avoid losing money.
Fidelity International’s Investor Survey says 71% of those surveyed are rethinking their retirement plans after the pandemic caused huge stock market falls and reduced the value of their pension pots.
More than half (54%) said they would definitely need to work longer.
These savers need to inform their pension provider, according to Maike Currie, investment director, workplace investing, Fidelity International.
Why is this necessary?
Most people with auto-enrolled pensions are automatically put on their company's default workplace pension fund.
But Currie says: "However, what you might not have been aware of is that this scheme will be based upon assumed retirement date. Its investment approach, including the levels of risk and growth opportunities you’re exposed to, will have been developed with a target date - usually around your mid-60s - in mind."
If you plan on working for longer than this, you should inform your pension scheme to make sure you are not missing out on years of extra pensions growth.
What happens if I don't?
Default funds invest for growth while retirement is a long way off, but as you get older your savings will be moved into lower risk investments to lock in growth and reduce the chance of sizeable losses.
Currie adds: “Around 18 years before a member’s planned retirement date, the strategy’s allocation shifts to more defensive assets to protect the value of their savings. Planning to work for longer means they can afford to delay the start of this shift, benefitting from several more years of asset growth before focusing on preservation."
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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