PensionsAug 26 2020

Savers turn backs on pensions in favour of accessible cash

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Savers turn backs on pensions in favour of accessible cash
Credit: Gareth Fuller/PA Wire

The coronavirus crisis has shifted concerns among savers away from pensions and towards accessible cash.

A survey by workplace savings provider Cushon found concerns about saving for retirement reduced by 20 per cent in May compared with last year, while three-quarters (73 per cent) agreed the coronavirus had made them realise that having accessible savings was “equally important” to pensions.

The research also found that four in 10 employees (41 per cent) would like to see their employers implement a ‘pension redirect arrangement’, whereby some of an employer’s pension contributions are redirected into a separate pot to cover immediate and medium-term financial priorities.

Support for a redirect arrangement increased to 49 per cent for under-35 year olds, as a quarter (23 per cent) reported concerns over how they would afford to buy a new home.

Steve Watson, head of proposition of Cushon said: “Financial wellbeing is an important part of the employee benefit mix – thanks to auto-enrolment most employees now have a pension but saving for retirement is not a priority for everyone.

"Employees – young and old – need to be supported throughout their working lives and a good financial wellbeing programme can provide this."

He added: “The reality for a lot of younger employees is that getting on the housing ladder is more important than planning for retirement. This isn’t to say that pensions aren’t important, they just aren’t a priority.”

The survey found other financial concerns had remained. One in six (16 per cent) were worried about how to manage card debt, and a quarter (24 per cent) were concerned about how to save consistently.

Fewer than one in 10 (7 per cent) claimed they had no financial concerns at all.

Darren Cooke, a chartered financial planner at Red Circle Financial Planning, said: “For younger people I can see the attraction of shorter term savings and in some cases the need.

"Retirement will seem like a long way away and there may be other goals or requirements for your savings or investments long before you get to that such as buying or moving house, children's education or a dream holiday.

“These can fall long before you are able to access pension monies so having access to shorter term, more flexible funds is a sensible plan. It does require a balance with your longer term goals and retirement income and that is exactly where a financial planner can help clients direct their money and investment appropriately.”