Over two million people in the UK over the age of 55 have stopped making regular contributions into a personal pension since the Coronavirus pandemic started earlier in the year, according to Sunlife’s Finances After 50 research.

Pre-crisis, 22% of over 55s were still paying into their pensions, that works out at an average monthly pension contribution of £147.49. This means that over the past six months, potentially hundreds of millions of pounds that would usually have been invested in pension pots has not been.

Simon Stanney, equity release director at SunLife said: “Our research shows that 28% of over 55s don’t have private pensions, of those that do, just 22% are still paying in regularly. And now we know that 16% of them have either stopped or reduced their payments because of the crisis.”

But, says Stanney, while many older people may be concerned about their financial future, for those who are homeowners, there may be another option. Older homeowners have seen their homes more than double in value over the past 20 years, from an average of £113,365 in 2000 to £240,681 today.

Pension plans de-railed

Andrew Megson, executive chairman of My Pension Expert says: “Covid-19 has upended many people’s retirement strategies. Indeed, research commissioned by My Pension Expert recently revealed that over one in eight (13%) workers aged between 40 and 67 have delayed their retirement date because of the pandemic. Although postponing retirement does not mean pension contributions should suffer.

“In times of financial crisis, people invariably try to cut out unnecessary expenditures. This is a valid measure to tackle cashflow issues. However, pension contributions should not fall under this category other than in more extreme cases; they are instrumental to achieving a financially secure retirement.

“Further, halting contributions essentially means that people are giving up free money. After all, organisations have to match employees’ pension contributions. So, it would be beneficial to make the most of their workplace pension scheme now, as it will put them in a stronger financial position for when they retire and can no longer depend on their salary.

“Ultimately, it is vital that pension planners do not panic, but rather they consult an independent financial adviser. An expert will be able to review their current financial situation and retirement goals and develop a tailored strategy to safeguard their present and future finances.”

Further reading

Number of people withdrawing from pensions up 6% in Q3 – HMRC data

Nearly one in 10 workers over 65 have given up work since Covid-19 lockdowns

‘Crisis’ warning as 70% of self-employed are not saving into a pension