It’s only natural to feel anxious or concerned about your pension pot. After all, everyone wants to enjoy their retirement to the fullest, which means having ample funds to live on.
However, the coronavirus pandemic has forced most people to put their personal finances into sharp focus, particularly those approaching retirement. As a result, ‘pension panic’ is sweeping the UK, with many making rash decisions about their financial nest eggs. In fact, scammers are now identifying and exploiting this fear among consumers.
With this in mind, here’s how to avoid pension panic and ensure your finances are secure enough for retirement.
What is causing the pension panic?
The disruption caused by coronavirus and its subsequent lockdown has not only affected our daily routines but also economic markets around the world.
As of mid-June, more than one in four UK workers were reported to be furloughed, while over 2.6 million self-employed people had applied for financial support from the government.
What’s more, British business executives are predicting that 3.5 million people will be unemployed by the end of 2020.
EY Item Club shows the UK economy will shrink by 8 per cent this year and is unlikely to recover from the damage wrought by coronavirus until 2023.
If your income or livelihood has been threatened by COVID-19, there’s a good chance you’ve looked at your long-time financial plans in greater detail.
This is especially true for those approaching the age of 55. After all, will you have enough money to live off when you retire? Is your pension pot working hard enough? When will you be able to access your hard-earned savings?
Answering these questions must require a measured and calculated approach, as scammers are increasingly targeting those with pension panic.
How are scammers capitalising on pension panic?
According to Action Aid, there were more than 2,100 cases of fraud in the UK in the first five months of 2020.
One common scam is the promise of a ‘free pension review’, which often results in the recommendation of a risky and unusual investment instead.
Another way in which scammers are taking advantage of pension panic is by promising under-55s that they can access their pension early tax-free without charge. However, this is only the case if the individual is facing financial hardship because of illness or other legitimate reasons.
How to avoid pension panic
“Pension panic can be an issue for consumers of all ages – and this has been amplified by the financial pressures imposed by the coronavirus,” says Andrew Megson, executive chairman of My Pension Expert.
“That said, it can be combatted by seeking independent financial advice. By providing a thorough assessment of all financial options, consumers can choose the best option for them, and make pension panic a thing of the past.”
Here at Cash Pension, we can provide you with tailor-made advice about your pension and whether you can access it prior to retirement for more financial control.