Covid-19 could be increasing the level of retirement inequality in the UK, Legal & General (L&G) Retail Retirement has warned, after research found that whilst 1.3 million savers are planning to retire early as a result of Covid-19, a further 1.45 million savers have had to delay retirement.

The provider found that two out of five (41 per cent) people aged over 50 who were not already retired had seen some impact on their career and retirement plans as a result of the pandemic, but both positives and negatives have been seen.

In particular, almost one in ten (9 per cent) pre-retirees over 50, around 1.3 million people, have seemingly benefited from the pandemic, and are expecting to retire an average of two years earlier than planned.

However, 10 per cent of this same subset, equal to around 1.45 million people, have had to delay their retirement by an average of three years as a result of financial setbacks caused by the pandemic.

In addition to this, a further 20 per cent, around 2.6 million people, expect to continue working indefinitely.

The provider also cited data from the Office for National Statistics, which found that people aged 50-64 were hit hard by the pandemic, with unemployment rising from 2.6 per cent in April 2020 to 4.1 per cent in December 2020.

L&G undertook further analysis of this data, which revealed that there are 429,000 unemployed over-50s in the UK, making up one in four (25 per cent) of all unemployed people.

The provider argued that the shift in household finances has led many people to adjust their retirement savings at a “crucial” period of their lives, with 68 per cent of workers over 50 stating that the pandemic has had a direct impact on their retirement savings.

This has seen 13 per cent of savers reduce their monthly retirement savings, as well as a further 13 per cent who have increased their monthly retirement savings.

However, those who saved more had put an additional £335 away a month, whilst those who were saving less had reduced their savings by an average of £230 a month.

Commenting on the findings, Legal & General Retail Retirement CEO, Andrew Kail, emphasised that there was "increasing evidence" of income inequality "across the board".

He stated: “One year on from the first national lockdown, we are starting to get a clearer picture of the long-term financial impact of the pandemic.

“On the one hand we have seen the number of people on Universal Credit double, while others have seen their savings reach new highs, according to the Bank of England.

“As our research shows, for the older generation that has prompted some people to take early retirement, while some are left questioning whether they will have to stay in work indefinitely.

“A dramatic shift in household income can often mean that people need to make changes in what they prioritise, but for people in these all-important ‘pre-retirement years’ these changes can have particularly long-lasting repercussions, particularly for those who have stopped saving towards retirement."

Kail added: “For over-50s worrying about their finances, it’s important they have a clear understanding of what they have in their retirement pots and what other assets are on hand to boost their income at the point they retire, such as property wealth.

“We recommend that anyone who has started saving less towards retirement return to their previous savings levels as soon as they are able to.

"For those that have been fortunate enough to save more during the pandemic, this could be an opportunity to make additional payments towards their retirement.

“To help those approaching retirement understand their options Legal & General has a free online course with The Open University, setting out a series of stepping stones to a financially secure retirement.”

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