The over 55s are warned that they may harm their standard of living in the future by accessing their retirement pots in the chaos of the coronavirus pandemic.
The Association of British Insurers (ABI) has expressed concern that people may be tempted to make up for immediate financial hardship COVID-19 locking in by using pension freedoms to access savings.
The industry agency warned against hasty decisions as stocks were hammered by the financial market collapse, which began in February, linked to the economic damage expected to be caused by the coronavirus disturbance.
He has seen the combined market value of the companies that make up the FTSE 100 drop 30% in just one month – but it must be said that funds are typically invested in a range of asset classes to mitigate risk.
The ABI has also highlighted the risks of bad advice or scams.
It issued its alert less than 24 hours after the publication by the Office for National Statistics (ONS) of the results of a survey which showed that nearly a quarter of British adults were financially affected by the COVID-19 pandemic. .
Almost a third were already using savings to cover living expenses, the study found.
The pension lifeboat, the Pension Protection Fund, also revealed this week that the black hole in defined benefit plans would have increased by £ 11 billion in March alone, with the total deficit reaching just under 136 billion pounds.
There have been separate concerns that the reduction in investment income, such as the collapse of corporate dividends, could tip savers into hasty choices for accessing their pensions.
The pension freedoms, introduced by George Osborne in 2015 when he was chancellor, allowed savers to use a direct debit product at the age of 55 – taking the total amount as a lump sum – despite the concerns about opaque fees and lack of sound advice.
Previously, only annuities – which offered regular and fixed income over a defined period of time – were available but were unpopular due to low rates.
The ABI expressed particular concern that those accessing their savings now would have no more money because men would have to live to 79 years of age and women would have to live to 82 years of age.
Its director of policy, long-term savings and protection, Yvonne Braun, said, “Rush financial decisions are rarely the right ones, even in these worrisome and uncertain times.
“The lock-up will not last forever, but the decisions you make today about your pension could affect your standard of living for years to come. “