One in five people in Britain say their income has fallen over the past three months – and more than one in four expect their financial situation to worsen over the next quarter.
The financial impact of the second coronavirus lockdown seems to be causing many to dip into their pensions to fill growing holes in their day-to-day finances – and there are fears that individuals may choose to cut back on vital protection cover to shore up things in the short-term.
A poll of 4,000 adults in the UK for pensions, protection and retirement specialist LV= found that 10 million adults say their income has decreased over past three months and 13 million expect their finances to worsen the next three.
The poll also found that around 36% of the adult population (18 million people) say their finances were worse than three months ago with only 11% saying they were better
More than one in ten (13%) of people surveyed have reduced the amount they are saving into a pension. Around 4% of people not retired at the start of 2020 said they have had to access their pension savings to make up for reductions in income or redundancy. Some 8% of those people not retired at the start of 2020 say a reduced income has meant they may have to retire later than planned.
Clive Bolton, managing director of savings and retirement at LV=, said that during the summer, loosening of lockdown restrictions led to an increase in consumer spending, a reduction in saving and an increase in spending on socialising.
But he added: “The second lockdown, increased company failures and redundancies are shaking consumers’ confidence and reshaping their attitudes to savings and spending.
“Many people are reducing their long-term savings into pensions, while some of those aged over 55 have even resorted to drawing money from their pension to make up for reduced incomes or job losses.”
But Bolton said that the development and introduction of vaccines is “terrific news” and he remained hopeful of an “uptick” in people’s outlook in the next quarter.