‘Worth Knowing’

19 April 2021

COVID- 19 and your pension

As the COVID-19 pandemic gradually recedes and we look to the future, we’ve all got an opportunity to review our finances and make sure we’re making the best use of what we’ve got.

For some of us, the pandemic might have meant tightening the purse strings. When that happens it’s easy to think of your pension contributions as an optional extra and consider opting out of Atlas as a way to increase your take-home pay.

But your pension is such a valuable part of your financial future that we’d encourage you to think very carefully before doing that. You’ll be missing out on contributions from your employer – free money that you wouldn’t otherwise get and won’t be able to claim at a later date.

For others, of course, the pandemic has reduced costs. Maybe you’ve been paying less on petrol because you’ve been working from home and not commuting, or you’ve saved money because you haven’t been able to go out as much.

If that’s the case, why not think about putting that money in your pension? The more you can save and the sooner you can start, the better your chances of having the retirement you want. If you want to change your contributions, you can do so via the member portal – by clicking the “Log in” button at the top of the screen or by contacting your employer.

But how much money will you need in retirement?

So, you may have extra money that can go into your pension, but how much money will you need to build up to live a comfortable retirement?

There was some research recently undertaken which found that broadly speaking there are three different standards of living in retirement: minimum, moderate and comfortable. The standards show you what life in retirement looks like at three different levels, and what a range of common goods and services would cost for each level. Mortgage, rent or social care costs, as well as other costs such as tax on pension income, may need to be added depending on your own circumstances.

Below is the annual amount you’ll need to meet the different standards:

These are the approximate figures for a yearly income for single people, or for a couple, living outside London.

Minimum Moderate Comfortable
Single: £10,000 Single: £20,000 Single: £30,000
Couple: £15,000 Couple: £25,000 Couple: £45,000

You can find out more about how these numbers have been worked out and what this income could cover at www.retirementlivingstandards.org.uk

Remember that we’ll be sending you your annual update in June – which will show you how much money you might get in retirement – how does this compare to the living standards?

So, what next?

Have a look at the living standards research and use our budget planner, which will give you an idea of  how much you might need at retirement.

There are perhaps long-term changes you want to make to your spending and saving habits as a result of what we’ve been through during the last year. Don’t forget to include your Atlas pension account in that – it’s a really important part of your future!

We recommend that before making any changes you take financial advice from an independent financial adviser. You can find one here: Money Advice Service.

If you’ve got a bit of extra money, putting it in your Atlas pension account is a great way to take advantage of the situation: your money will be invested and hopefully growing to give you the life you want in retirement. And that’s worth knowing.