The pandemic has impacted people's ability to save, with 300,000 savers no longer able to participate in a workplace pension, according to research.
The repercussions of lockdown, particularly domestic work and homeschooling, have caused women to suffer the largest financial strain, with them being 50 per cent more likely to enter their retirement without a private pension than men.
‘Pandemics and pension inequality’, a Now Pensions report in collaboration with the Pensions Policy Institute, highlighted a rise in what it called the under-pensioned, with 2.8m people now being excluded from workplace pension saving, up from 2.5m in 2020.
Under-pensioned groups, comprising ethnic minorities, disabled, carers and single mothers, have private pension wealth of only 15 per cent of the UK average.
Employment levels declined for under-pensioned groups as furlough schemes and an increase in part-time employment negatively impacted their ability to save, it stated.
These individuals were more likely to feel the impact of labour market inequalities, due to the higher rate of under-pensioned labour in industries — including tourism, retail, hospitality or part-time employment —that were negatively impacted by the pandemic, the report continued.
Samantha Gould, head of campaigns at Now Pensions, said: “It was very clear at the start of the pandemic that the under-pensioned groups that we identified in our 2020 report would be the most financially affected by the economic downturn.
“They are more likely to work in sectors that have been severely impacted by closures, furlough and redundancies.
“In this report, we look at both the short-term and long-term effects of the pandemic,” she continued.
“We need to ensure that everyone has the same opportunity to save for later life, and so we are calling on the government to make the policy changes that were recommended by the 2017 automatic enrolment review as soon as possible, so that we can enable these groups affected by the pandemic to recover at a faster rate.”
Meanwhile, the rising cost of living is beginning to bite, with 52 per cent of people with disabilities spending significantly more on utilities and bills than before the pandemic, and 37 per cent spending “somewhat” more than their pre-Covid 19 expenses.
With a higher number of women being furloughed, the gender pay gap also increased in the year to April 2021, according to the Office for National Statistics.
In spite of the economic recovery the UK is witnessing this year, it is highly likely that under-pensioned groups will continue to feel the long-term impact of the pandemic.
Now Pensions claimed pension saving via auto-enrolment was the most efficient method of tightening the savings gap for the under-pensioned.
Abolishing the current £10,000 auto-enrolment trigger would result in a further 2.8m people saving into a workplace pension.
Contributions beginning from £1 would help inflate pension saving for these under-pensioned groups by an average of 30 per cent, and for the worst affected, such as single mothers, this would increase to 52 per cent, it stated.