Low-paid UK workers who lost income during the Covid-19 (Coronavirus) pandemic have missed out on employer pension contributions estimated to be worth £122 million, according to new research.
The figure was calculated by pensions specialist Scottish Widows in its latest Retirement report, which was carried out online by YouGov among 5,059 adults who normally earn between £10,000 and £20,000 a year.
The research found that some low-paid employees had faced growing financial pressure during the pandemic regarding paying bills and saving for the future, as nearly one-third (31%) suffered a decline in their finances and almost one in five (18%) saw a drop in income.
More than half (54%) were concerned about running out of money in their later years and nearly one-quarter (23%) expected to work until they drop, compounding worries about retirement.
Despite the challenges, the proportion of people saving adequately for retirement and putting away the recommended minimum 12% reached a record high of 61% this year.
This was mostly driven by young savers, with 6% more 30–39-year-olds now saving adequately compared to last year, due to a reduction in living costs and the UK government’s decision to continue supporting pension payments through the Coronavirus Job Retention Scheme for those working in the worst affected sectors.
Pete Glancy, head of policy at Scottish Widows, explained that Coronavirus has had a “massive” impact on the nation’s finances, particularly on those who were already struggling financially, calling for reforms so those forced to opt out of pension auto-enrolment to make ends meet will continue to receive contributions from their employers.
“Those working from home have benefited from reduced commuting costs and everyday expenses, allowing them to boost their savings. But those on lower incomes – and less likely to have worked at home during the pandemic – have seen their finances hit hard, and are leaning on savings to cover bills and short-term needs,” Glancy said.