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Pension savers opt to increase rather than reduce contributions during pandemic

Covid-19 spurs a boost in demand for advice-based pensions

50% of Pension advisors reported an increase in demand for retirement planning services over the last 15 months, while more than 4 in 10 people have also revised their pension contributions upward to varying degrees. These are among the primary findings of a new survey of over 100 Pension advisors undertaken by leading pension trustees, Independent Trustee Company (ITC). The survey sought to gain insight into changes in consumer attitudes and behaviour towards retirement and pension planning as a result of the pandemic.

Other highlights from the ITC survey included:

  • During the pandemic, only 10% of advisors saw a reduction in demand for retirement planning services
  • Just 2 in every 10 pension savers reduced their contributions during the pandemic

Glenn Gaughran, Head Of Business Development And Marketing, at ITC commented,

“Events over the last 15 months have made people more aware than ever of how vulnerable they are in terms of health, wellbeing, and financial security. It has exposed new perspectives on how we view what many might consider the ‘basics’ and shown us that the future we are planning for is far more uncertain in reality than is often comfortable to believe.

Since the onset of the pandemic, 90% of advisors have seen interest in retirement planning either continue as normal (40%), or grow (50%) during this time. In many ways, we are seeing the uncertainty and sweeping changes we have experienced over the last year or so unfold in terms of their impact on how we plan for our financial future, and how we perceive pensions and retirement in our list of priorities.”

The ITC survey also found that 42% of responding advisors felt that people’s habits had changed in favour of greater pension contributions during the pandemic, while just 20% noticed a decrease in the amount their clients were putting in. The increases may reflect a greater importance placed on retirement or a redirection of people’s additional disposable income.

Mr. Gaughran commented,
“It’s interesting to note that while 37% have increased their contributions a little, just 5% have increased them a lot, perhaps indicative of the apprehension people feel to save extra for the future, but not so much that they suffer unduly now. By the same token, among those who have decreased their pension contributions - perhaps those feeling the economic pinch - a far greater number have decreased their contributions a little rather than a lot – 15% as opposed to 5%. 38% of responding advisors felt there was no change. So, while people are certainly responding to the changing environment, they are doing so very cautiously and strategically in terms of their pension planning.”

Mr. Gaughran concluded,

“The economic crisis wrought by the pandemic has undoubtedly had an impact on job security and perhaps stoked fear that people may not be able to save enough for their retirement. While interest rates continue to remain low, stock market returns have been strong even during the worst of thecrisis, and those returns may be enticing people to contribute more.”