The Association of British Insurers (ABI) has warned savers against making rash decisions with their pension savings during the Covid-19 pandemic.

It raised concerns that people would see their pensions as “a quick way of raising cash” during the coronavirus uncertainty and would be tempted to use pension freedoms to access their savings at age 55, without thinking of the long-term consequences.

The organisation also cited worries about the threat of pension scammers during the crisis.

ABI urged savers to consider using other sources of income if possible, such as cash savings, as it would carry fewer long-term financial risks.

Using financial advice services, such as Pensions Wise, before making any decisions was also recommended, while it reminded savers that pensions were typically invested in a range of assets and were likely to have been adjusted to cushion the impact of the financial crisis.

Finally, it warned that scammers were likely to be trying to take advantage of the uncertainty and urged savers to be on their guard against fraudsters.

“Rushed financial decisions are rarely the right ones, even at this worrying and uncertain time,” said ABI director of policy, long-term savings and protection, Yvonne Braun.

“Lockdown will not last forever, but the decisions you make today about your pension could impact on your standard of living for years to come.

“Now, more than ever, it is important to think longer term, consider your options, and seek advice and guidance - whether from the Money and Pensions Service or a financial adviser – before making any decisions.

“And don’t fall victim to scammers – shun any unexpected approaches; and remember: if a deal seems too good to be true, it almost always is.”

The People’s Pension director of policy, Gregg McClymont, echoed Braun’s message, saying: “There’s no doubt we’re living through a difficult time and for many money will be a worry. But as the ABI advises, those savers who are able to access their pension pots should take professional advice before doing so to ensure they’re making the right choice for them financially.

“For many auto-enrolment savers closer to retirement, their pension provider will have altered their investments to reduce risk for members as they come towards claiming their money. This has protected their pension savings from the worst of the market falls and should give older savers comfort that their retirement plans are still secure.”

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