This affects the value of Defined Contribution (DC) pensions for individuals, and the funding position and security of Defined Benefit (DB) pensions for scheme sponsors. The ability of both individuals and employers to make pension contributions is also likely to be impacted. Different cohorts will be affected in different ways, with younger workers at greater risk of experiencing job losses or being fur-loughed, while those approaching or in retirement will face difficult decisions about whether to delay or reduce the retirement income they take in order to preserve their pension pot.
This Briefing Note explores the impact that the 2020 coronavirus (COVID-19) pandemic may have on pensions now and in the future. It explores likely impacts in terms of:
- Stock market volatility and its effects on DC pot sizes and DB scheme sponsors’ ability to deliver on member promises.
- Employment and the Government Job Retention Scheme.
- The effects on different age groups, including younger workers, those approaching retirement and those already in retirement.