The current pandemic threw finances into turmoil in the Spring and many people had to delay retirement plans as pension investments were shaken by the stock market crash.
The value of many pension pots fell dramatically.
In recent months, markets have recovered however many pensions are still not at their pre-lockdown value.
On top of the stock market falls, many pension savers have been forced to reduce or even stop contributing to their pensions as their income has been affected by the lockdown.
A survey by Scottish Widows found that one in ten working adults cut back on savings for their retirement during lockdown*. Opting out of a workplace pension means that you will lose both your employer contributions and the government tax relief.
43% of self-employed workers and 16% of employed workers* saw a drop in income since lockdown measures were introduced meaning many people are unable to save as much into their pension as they did previously.
At Four Wealth Management, our Financial Advisers have been advising clients on ways to help your pension pot recover faster.
Stay invested
Many people sell their stock market investments as they approach retirement age, however you could miss out on any potential growth if you sell your investments too early. At Four Wealth Management, our Financial Advisers usually recommend that clients stay invested in the stock market and withdraw income from their pensions as and when they need it rather than keeping their assets in cash.
Defer your state pension
Another option if your private pension currently provides enough income for your needs is to defer taking your state pension. If you qualify for the full state pension of £175.20 a week, by deferring for a year, you will get an extra £10.16 a week.
Utilise other income sources
If you are ready to retire but do not want to start drawing income from your pension before it has fully recovered, a Financial Adviser at Four Wealth Management can work with you to determine other sources you can get income from temporarily, for example from ISAs or cash savings. This will allow your pension pot to remain invested for a longer period.
Book a no-obligation meeting
If your finances have been impacted by Covid-19 or you just want to review your financial situation, you can book a no-obligation meeting with one of our financial advisers. They will discuss your current situation with you alongside determining short and long term objectives and create a bespoke plan tailored to help you achieve your goals.
Contact us on 0117 973 0500 to book now. The meeting can be face to face or by telephone/zoom.
*Scottish Widows, 2020, Survey of 2,251 workers during Covid-19 crisis
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
