Brits rely more on state pensions since the pandemic

With months of unemployment and the furlough scheme stripping some companies to the bare bones after the pandemic, you might’ve seen a dip in your personal or company pension.

With experts predicting a necessary post-tax income of at least £16,700 for retired couples, it’s time to look at the facts to see how you can manage the impact of the pandemic on your finances this winter.

Rising inflation

Inflation has been rising at an alarming rate this year, putting strain on the finances of those of us who no longer work full-time. In June the Office for National Statistics reported a 2.4% rise in inflation, but this is forecast to climb higher to above 4% as we go into December and beyond.

In simple terms, this means the value of the money you’ve worked hard to save up is decreasing – and unfortunately, it’s completely out of your control.

Post-pandemic pensions

The aftershocks of the height of the Covid-19 pandemic aren’t limited to strains on our family lives and mental health: many older individuals are reporting having drawn from their pension savings, borrowed from banks, or borrowed from friends and family.

Research from equity release specialists, Key Advice, has revealed that Brits are now much more reliant on state pensions as a direct consequence of pandemic-related financial strain. See some of the key findings from the study below:

• While company pension schemes are still the most significant source of pension income, this has decreased across men and women from 33% to 31.5% over the course of the past year

• Reliance on state pensions has increased by over four per cent to 32% over the same period

• The overall reliance on personal pensions also decreased slightly

• With more people opting to make use of opportunities like equity release, housing equity usage saw a slight increase from 11% to 12.5%

If these figures prove anything, it’s that the financial impact of the pandemic has been widespread across the more elderly members of the population.

How to keep saving

Now is the most important time to seriously consider what to do with your hard-earned savings, and this could include managing your assets too. It’s recommended to keep as much of your pension as possible in one place, where it’s guaranteed to grow at least at the same rate as inflation.

The only exception that could apply is if you’re already in receipt of a defined benefit pension scheme: in that case, you don’t need to worry about inflation.

Otherwise, you need to be in a confident position to deal with any incoming changes – so consider any opportunity to make your money go that little bit further.