The impact of COVID-19 upon DC pensions
Whilst retirement lifestyles in the UK are not always mainly funded by pensions (e.g. property income may be important for some), the majority of them are. COVID-19 and the UK lockdown, is leading many people to rightly reconsider their retirement planning.
Some may still be able to retire early as planned. Others may need to think about delaying their plans or taking a lower yearly income in retirement than originally planned.
The impact of COVID-19 upon pensions has been considerable. Those nearest to retirement will likely have been most shielded from the market volatility, since much of their portfolio will probably be in “low-risk” assets such as cash and bonds.
For those in their forties and fifties who hoped to retire early within the next 5 years, however, questions will be hanging over whether or not this will still be possible. Many of these individuals are likely to have a high level of exposure to equities in their portfolios, which have taken a considerable beating in 2020.
The FTSE 100, for instance, took a huge dive in March (similar to other leading indices) after the announcement of lockdown measures, leading to its worst day of performance since 1987.