LV= has studied how the finances of the UK’s households have been affected by the Covid-19 crisis.
Its survey of the experience and financial position of 4,000 UK consumers found that 31% of consumers say they are worried about their finances. However, relatively well-off people – those with assets (excluding property) of between £100,000 and £500,000 – are less likely to have seen a fall in income from employment, less likely to have been furloughed and more likely to have seen a fall in their monthly outgoings.
The Covid-19 crisis and fears about the future have prompted 18% of the general population to review their finances and 23% have been saving more money during the past three months.
31% of consumers say they are worried about their finances, and 28% have seen their outgoings decrease in lockdown leaving them with increasing amounts of money in their current accounts.
The coronavirus outbreak has prompted many people to review their retirement plans but they are divided about what they will do next.
28% have seen the value of their pensions fall, some 6% of the over 55s are considering taking early retirement while conversely 4% are thinking of delaying retirement.
Despite this, only 3% have consulted a financial adviser in the past three months. Fewer than one in ten (8%) have increased the amount of money they are saving into a pension, while one in 10 have cut their pension contributions.
Part-time workers have been most affected by the coronavirus outbreak with 40% seeing their incomes fall compared to 26% of full-time employed people.
Clive Bolton, managing director of savings and retirement at LV=, said: “Coronavirus has been a huge shock and the lives and finances of millions of people have been disrupted. Our survey of the UK population’s financial confidence, health and attitudes to spending and saving reveals just how worried people are about the future.
“Although relatively well-off families have been able to save more as they remain in employment and their monthly outgoings have reduced, coronavirus is further polarising the personal finances of people in the UK and many people – particularly those who are self-employed or working part-time – have been hit much harder.
“The big challenge will come when furlough schemes come to an end and it is understandable that many people are saving more money into cash when the future is so uncertain.
“With the stock market volatility of the last few months and fears about impending job losses, it’s understandable that people are taking a safety-first approach and saving more into current accounts.
“However, saving too much into cash means you could miss out on future investment growth while cutting pension contributions can cause you to have less money in retirement. Talking to a financial adviser is a good idea before taking money out of investments or drawing an income from a pension.”