Millions of workers face a lifetime of 'playing catch up' on retirement savings after crisis, firm warns

Hospitality, retail and travel workers may struggle to retire as the coronavirus crisis has left them facing a lifetime of “playing catch up” on their savings, warned Scottish Widows.

The pension provider said that more than a quarter of people working in travel and the arts have not yet started saving into their pension and two thirds of retail workers are concerned about running out of money in old age.

Scottish Widows said this group was already finding it difficult to save adequately for their retirement before the pandemic, and that it was highly likely these workers are now facing new financial pressures that will make it even harder to save.

Pete Glancy, of Scottish Widows, said that while three fifths of people are estimated to be saving adequately for retirement, this is heavily dependent on the industry they work in.

Employers are now legally obliged to start paying into a pension for workers, but the minimum acceptable contribution is often below what is required.

Mr Glancy said: “While auto-enrolment has transformed the retirement prospects of millions, minimum contributions are still far below what is needed to provide a good standard of living.

"We recognise that the next 12 to 18 months is going to be about businesses getting back on their feet, but many individuals have taken a substantial hit to their finances and the fear is that the gap can't be closed, meaning they face a lifetime of work as they struggle to afford to retire."

The pension firm also warned that “multi-jobbers” could miss out on pension contributions as their income is split between several employers meaning they do not meet the minimum requirement for automatic payments.

A quarter of people who work in travel and tourism and the arts have more than one job, the company said.

Mr Glancy added: "The pension system unfairly penalises those who are in low-paid work. Scrapping the minimum earnings threshold would allow millions of multi-jobbers to benefit from auto-enrolment like everyone else, and is long overdue."