More expecting to up pension contributions post pandemic

The scaling back of lockdown restrictions is boosting consumer personal finance confidence with one in seven expecting to increase pension contributions in the next year. The Scottish Widows UK Household Finance Index found optimism from UK households hit a five year high in the second quarter of 2021 despite some extension of restrictions. There was also more interest in long term Financial Planning along with better trends for savings and a more positive outlook towards the longer term, Scottish Widows survey found. Two in three pension savers said they no longer expected to delay retirement. Sentiment around job security and income picked up with some workers from shutdown sectors returning from furlough. The headline seasonally adjusted index – which measures households’ overall perceptions of financial wellbeing – rose from 42.0 in Q1 to 44.7 in Q2. The reduced financial strain in the second quarter also fed through to a strong rebound in sentiment towards household finances over the next 12 months. For the first time since Q1 2016, UK households expect their financial wellbeing to improve over the coming year, with 18–34-year-olds particularly upbeat about their financial outlook. Jackie Leiper, pensions, stockbroking and distribution director, Scottish Widows, said: “As UK governments take a reasonably cautious approach to opening back up from lockdown, there are clear signs of growing consumer confidence. The more positive picture we can see this quarter is that more households are planning to use savings they have made during the pandemic to bolster their financial resilience. “There was also good news for long term Financial Planning, with more than two-thirds saying that they did not expect to have to delay retirement and around one in seven planning to increase regular pension contributions over the next 12 months.” Fewer households pared back their retirement savings during the second quarter of 2021, with around one in six (16%) households reporting a drop in the amount saved, down from 20% in the previous two quarters. Compared to before the Coronavirus outbreak, survey data showed that 44% of households have maintained their retirement savings contributions. The percentage reporting a fall in regular funds placed into their retirement pot through the pandemic (14%) was only slightly higher than those signalling a rise (13%). Around one in seven expect to increase their regular contributions to retirement savings in the year ahead. Scottish Widows said this suggests that for some the pandemic has increased the importance of longer-term Financial Planning. Most households (68%) expected to stay on track with their retirement plans despite the pandemic with just 17% expecting to delay retirement. The most common reason for delaying plans was financial uncertainty (41%). In terms of financial resilience, 41% of respondents have made additional savings since February 2020, with 67% of the highest earners putting aside more during the pandemic compared to 18% in the lowest income band. The vast majority (87%) expect to retain at least some of their savings during the next 12 months, suggesting that some of these funds will be put towards longer term goals, with those aged 45-54 the most likely to retain savings beyond the next year (91%), Scottish Widows predicted. The data also revealed that the pandemic has led some to reconsider their preparations for the worst. Almost one in 10 (9%) people took out a life insurance policy after the start of the pandemic, while around 6% obtained coverage for mortgages, medical bills, income, and critical illness.

More expecting to up pension contributions post pandemic

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