What to do if you are facing a “pensions blackhole”

17th June 2020 by RetireEasy

Fidelity International has issued a stark warning that over half (51%) of the UK’s pension investors will not have enough money to meet their needs in retirement because of a drop in the value of retirement savings following the impact of Covid-19.

Fidelity’s Investor Survey captures current UK investor and found that just 29% of them believe they’ll have sufficient income to cover their retirement plans. Three fifths (61%) of investors who had been hoping to retire within the next five years have seen the value of their pension investments fall.

Maike Currie, investment director for workplace investing at Fidelity International, says: “The Covid-19 market falls will be remembered for their speed and brutality, with extreme market volatility, often over consecutive days.

“While the market has recovered some of these losses, for many the impact will be far longer lasting, with half of investors reporting a ‘pensions blackhole’ impacting their retirement plans. Pension pots that have taken decades to build may have suffered sharp losses, leaving those near retirement assessing their options for bridging the gap between their expectations and their actual income.”

Amongst those who see their savings falling short, the most popular plan is to carry on working: either full-time (36%) or part-time (35%). Some 21% are hoping for an inheritance to make up the shortfall while 18%) are planning to be financially supported by their partner.

Some options to consider

The advice from Fidelity depends on just how close you are to retirement as younger investors have the luxury of more time to see their savings recover in value.

Those closer to retirement age may look to delaying relying on their diminished savings pots by continue to work or to reduce their outgoings. If that is your chosen route, be sure to advise your pension provider about any change to your expected retirement date.

Says Maike Currie: “For those nearing retirement, working for longer may not be an option they either want or can pursue, depending on their circumstances. Similarly, they’re likely to want to hold onto their desired standard of living as much as possible.

“Drawdown allows you to remain invested for as long as possible – benefiting from potential market recovery – while also offering you access to flexible income. However, always make sure you have sufficient cash or a guaranteed income – this could be your state pension, an annuity or defined benefit pot – to cover the essentials.

“As Covid-19 has taught us all, you really never know what is waiting around the corner.”


So what sort of retirement are YOU on track for?

Finding out is easy using the RetireEasy LifePlan. Key in your data and you’ll see at a glance just how much you can safely afford to spend in retirement on your current savings trajectory

Many people are deterred from getting a real handle on their retirement prospects – some out of fear of what they will discover, and some because, with values of assets and other factors always changing, they don’t know how to keep track.

RetireEasy.co.uk makes it easy – you only have to set up your finances once, and then keeping up to date is easy. The ability to model different scenarios means that you can find the easiest way for YOU to manage your finances AND retire in comfort.

Find out your retirement income for just £4.99 per month. Here’s how https://www.retireeasy.co.uk/news/find-retirement-income-just-4-99


New features on RetireEasy.

Not yet retired?

You can now include all your additional savings, investments and Pension Contributions between now and your retirement, taking into account increasing these Additional Contributions year-on-year and stipulating whether these are one-off or recurring contributions. As always, you can revisit these projections and change them at any time either when your expectations change, or you have real numbers to replace projections already made.

New useful charts?

There are now three additional charts, further breaking down your assets and income.

Download your data in a spreadsheet?

You can now also download spreadsheets giving you the opportunity to view all of your entered information, and your entire LifePlan in one glance.

Sign up now