46% of currently furloughed workers have changed their retirement plans, according to new research from Canada Life.
The government’s furlough scheme comes to an end this month.
According to the survey, 28% of workers on furlough plan to retire later, while 18% plan to retire earlier than previously planned. However, 36% plan to retire at the same time as previously anticipated, and a further 18% are still undecided.
Those aged over-55 appear less worried about the impact of furlough on retirement plans than their younger counterparts. As a result of the pandemic and being on furlough, 53% of 18-34 year olds said their retirement plans had changed, compared to 34% of those over-55s. 35% of 18-34 year olds on furlough now plan to retire later than planned, compared to just 10% for the over-55s. Furlough and the pandemic has accelerated retirement plans for 23% over 55s who plan to retire earlier, compared to 18% of 18-34 year olds.
Andrew Tully, technical director, Canada Life, said: “The government’s furlough scheme has been a lifeline for millions across the UK, however we cannot underestimate the number of people who will come out of this scheme in a challenging financial situation. This is demonstrated by the fact that many are changing their retirement plans, with a third of younger people planning to retire later. Interestingly almost one in four over 55s are actually thinking about bringing forward their retirement and leaving work earlier than planned. This could have serious implications for the economy with decades of experience potentially leaving the UK workforce just as we face a jobs and skills shortage.”
Due to the significant impact the pandemic has had on people’s finances, 9% of over 55s have accessed their pensions while on furlough to help make ends meet. Many over 55s have flexibly accessed their pensions, with 7% using both their tax-free cash and drawing down additional sums. This triggers the Money Purchase Annual Allowance, which restricts any subsequent tax efficient savings and caps the amount at £4,000 a year, and yet 13% of the over 55s have plans to make additional savings or pension top ups once the furlough scheme ends.