Effect on financial markets means it’s vital to review retirement plans, says Zurich International pensions expert
Some of the longer-term financial consequences of the pandemic – such as how it might impact workplace pensions – are being overlooked. So, for businesses and their employees there’s never been a more important time to review retirement plans.
That’s the view of Stephanie Hatton, Corporate Distribution Manager for Zurich International’s Corporate Solutions who is part of the company’s team of Isle of Man based pensions experts.
She said: “Even before the pandemic began there were widespread global concerns about the retirement savings gap, and there’s strong evidence that has gap has grown significantly due to the effect of Covid-19 on the global economy and financial markets. Figures from the World Economic Forum (WEF), for example, show that prior to the pandemic individuals were, on average, already outliving their retirement savings by between 8 and 20 years. Covid-19, WEF says, has accelerated that trend because of its impact on employment, health services, government budgets, investment markets, interest rates and, crucially, dividend payments upon which most pensions rely. Data from our parent company Zurich Insurance Group, one of the world’s leading insurers, raises similar concerns. Even if a business or individual was 100% sure before the pandemic that their workplace pension was meeting their needs, that may have changed now – so reviewing those plans is essential.”
For Isle of Man based businesses and individual residents, she adds, there are advantages to be gained from choosing an Isle of Man based pension provider. “Isle of Man Government actively encourages pension savings by offering tax relief for contributions paid into an approved scheme,” she said. “Isle of Man pension schemes provide flexibility on retirement benefits, which could provide you with up to 40% tax free cash from your pension at retirement, depending on the scheme you join. Unlike the UK, there is currently no auto enrolment in the Isle of Man, so if your employer does not offer an occupational or group personal pension arrangement currently, you can still make provision for your retirement by setting up and contributing into a personal pension, such as a Self-Invested Personal Pension (SIPP). Choosing a pension from an Isle of Man-based provider also gives you the peace of mind that comes from having your retirement savings with a local business that’s easily accessible to you if you need support.”