Pension alert as over 50s facing ‘poverty’ and hefty tax bill – are you impacted?

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Pension savings alongside the state pension are considered particularly important in retirement to help older people with costs. Many will take action on the matter decades ahead of their departure from the workforce to ensure they have enough for later life. However, research conducted by Scottish Widows has uncovered a potentially dire situation for those approaching retirement.

The study found over half of people in their 50s now fear running out of money in retirement.

This is partly attributable to this group bearing the brunt of income decreases during the pandemic, as well as job losses.

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With financial challenges faced by over 50s, many are making use of the flexibility pension freedoms rules allow and are dipping into their pension pot.

Britons can go into their pension savings from the age of 55, with 383,000 people withdrawing money from their pension in the first three months of 2021 alone – a 10 percent jump on the same period last year.

READ MORE: DWP update: Britons could be owed up to £5,000 in ESA backpayments

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Anything paid into a pension above this limit will attract a bill from the taxman, which could scupper a person’s plans for retirement. 

This could be a situation which is faced by anyone who is made redundant and then later re-joins the workforce, for example.

As a result, then, Britons are being encouraged to think more actively about their pension and the consequences of certain decisions. 

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Pete Glancy, Head of Policy at Scottish Widows, exclusively told Express.co.uk: “While we’re right to be worried about the lasting impacts of this pandemic on all age groups, those in their 50s need to act urgently to get their savings back on track before retirement, having been forced to use their existing savings just to get by.

In addition, Mr Glancy called for an auto-enrolment-type scheme for the self-employed, many of whom have been described as falling through the cracks of Government support measures.

Many self-employed people are not saving into a pension due to not being prompted to do so, and a scheme may offer significant assistance.

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Finally, further signposting towards financial advice has also been posited as a potential solution to pension issues.

Financial advisers are often seen as being able to offer Britons tailored financial advice to assist them in retirement. 

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