Are more savers accessing their pensions due to Covid-19?

Recent figures published by HMRC which highlight a 6% increase in the number of individuals who withdrew money from their pensions between July and September this year, compared to the same period in 2019, are certainly worth further investigation.

The number of people withdrawing money from their pensions generally peaks each year in April, May and June before subsequently falling in the following three months.

The latest statistics from HMRC therefore indicate a divergence from the normal seasonal patterns and the Revenue has suggested this change in behaviour may be attributable to the impact of Covid-19.

If this recent spike has indeed been driven by the fallout from the global pandemic, it is vital that individuals aged 55 and over fully assess the implications of withdrawing money from their pension in order to address more immediate concerns. It is important for individuals to remember that their pension is primarily designed to provide them with an income throughout their retirement, which may last for two to three decades. This is a concept that investors can easily overlook, particularly since the advent of pensions freedoms in 2015, which provided much greater flexibilities as to how retirement funds can be accessed.

The potential long-term consequences of taking money from a pension either too early or too quickly can have a seriously detrimental effect on an individual’s financial security and wellbeing in retirement. And for those who think that the State Pension is sufficient to provide a decent standard of living once they attain their State Pension Age, they are in for a rude awakening. The State Pension provides little more than a basic level of subsistence, which is only likely to reduce in real terms in the years ahead.   
It is therefore important that individuals take professional advice when they come to withdraw money from their pension to ensure they consider the tax consequences of doing so and any other alternative options available to them before making a major financial decision which they may live to regret.

Relevant considerations should also include factoring in the potential effects of sequencing risk on withdrawals (i.e. withdrawing money based on timing and a range of market volatility scenarios, including market crashes); lifetime cashflow modelling to identify the various sources of income available in retirement and the likely levels of expenditure each year throughout retirement; adopting a suitable risk profile and assessing capacity for loss, amongst other things.     

At least the bright spot in the data appears to be that the average amount withdrawn per person between July and September 2020 was £6,700, falling by 7% from £7,200 during the same period in 2019.  This is a positive indicator particularly when markets are volatile, as they are likely to remain so until a more permanent and sustainable solution can be found to controlling the spread of the virus,  there is greater clarity over the outcome of the US Presidential Election, US-China trade relations and, of course, the Brexit trade negotiations. These are all challenges which even the most experienced investors will need to carefully navigate in the weeks and months ahead, let alone those who are facing such decisions for the very first time.    

Paul Sweeny MSc. FPFS
Managing Director and Chartered Financial Planner
Sweeny Wealth Management Ltd
Mobile: 07980 851840 

The views contained herein are not to be taken as advice or a recommendation to buy or sell any investment. Furthermore, the material should not be relied upon as containing sufficient information to support an investment decision. The value of investments, and the income from them, can go down as well as up and you may get back less than you invested.

Sweeny Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority (FCA No. 821005)

Economic Review – August 2020

Our economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future.

It is not intended that individual investment decisions should be taken based on this information; we are always ready to discuss your individual requirements. 


As recent economic statistics confirm the UK officially entered recession, Bank of England (BoE) forecasts suggest the slump will be less severe than previously thought, but the ensuing recovery is likely to take longer.

Data released by the Office for National Statistics (ONS) showed the economy shrank by 20.4% between April and June compared with the first three months of the year. This was the UK’s largest ever quarterly contraction and pushed the economy into its first technical recession – defined as two successive quarters of negative growth – since the 2009 financial crisis.

While the data was undoubtedly grim, it did show the economy’s low point was reached in April when output was over 25% below its pre-pandemic level. It also showed that, as lockdown restrictions eased, the economy bounced back, expanding by 8.7% in June following growth of 1.8% in May.

Survey evidence also suggests this improvement has continued, with the IHS Markit/CIPS flash composite Purchasing Managers’ Index rising to a near seven-year high of 60.3 in August, up from 57.0 in July. However, while this does indicate accelerated growth, it does not signal a return to normal levels of output.

The BoE’s latest economic forecasts released in early August, reinforce this point. Although the Bank said that a faster easing of lockdown restrictions and a more rapid pick-up in consumer spending has helped the economy rebound faster than previously envisaged, it also warned that a slower paced recovery now appears likely.

Specifically, the new BoE forecasts suggest the UK economy will shrink by 9.5% this year, compared to a previously estimated contraction of 14%. The annual growth rate in 2021 has been reduced to 9% from a previous estimate of 15%, which would mean the economy only regaining its pre virus size at the end of 2021.


The BoE left base rates unchanged following the latest meeting of its Monetary Policy Committee (MPC) but stated that it was ‘currently considering’ the case for cutting interest rates below zero.

At a meeting held on 4 August, the MPC voted unanimously for no policy change, with the Bank Rate maintained at a record low of 0.1%. In addition, the minutes of the meeting stressed the Bank has no intention of raising rates until there is ‘clear evidence’ that a recovery has taken hold. The minutes also stated that the MPC continues to ‘monitor the situation closely’ and that it is keeping under review a range of possible policy responses.

One potential course of action open to the MPC is to impose negative interest rates in order to provide stimulus to the economy, a path that central banks in both Japan and the Eurozone have gone down. The BoE confirmed they are currently considering whether the Bank Rate could be cut below zero and whether such a policy might prove to be an effective tool in the UK.

However, BoE Governor Andrew Bailey again reiterated that policymakers are unlikely to introduce negative rates at any point soon, partly because such a move could inadvertently reduce bank lending or lead to customers withdrawing their savings and holding them in cash. Additionally, there is a fear the public will find the whole concept of negative interest rates difficult to comprehend.

Commenting specifically on the prospect of negative rates, Mr Bailey said: “They are part of our toolbox… but at the moment we do not have a plan to use them. There would be a lot of explaining to do on what this means, why we’re doing it, and what the benefits would be.”

How to avoid becoming the victim of a pension scam

Following the publication of an article by the BBC over the weekend – ‘Degree-educated savers ‘at risk of fraud’’ (, we thought we would highlight some key tips on how to avoid becoming the victim of a pension scam.

The BBC article referenced above, details the findings of a survey conducted by regulators, which identified that degree-educated savers are at greater risk of losing their pensions to fraudsters than those individuals without qualifications. Whilst this may be the result of fraudsters targeting people with potentially larger pension funds, 14% of respondents with a degree told regulators that they would accept the offer of a ‘free pension review’ from a company they did not know. When it comes pension fraud, no-one is immune from falling victim.

Sadly, I have witnessed first-hand how pension scams have devastated both people’s lives and their retirement plans. Over the last couple of years, I have been asked by a few people to help them try and rebuild their futures, after they had previously fallen victim to pension scammers. Between them these individuals had suffered combined losses of circa. £120,000 (this figure only includes original investment capital). The survey conducted by regulators found that on average pension scam lost £82,000 in 2018.

One thing that quickly becomes apparent from talking with victims is that they feel very angry, amongst a host of other emotions, at having their life savings taken from them.

In the instances that I have come across, the investors concerned had been recommended wholly unsuitable, high-risk and illiquid investments, affording them no diversification whatsoever. Such investments predominantly related to obscure overseas property development and infrastructure projects, which subsequently collapsed, leaving nothing left of their original capital. Furthermore, as the advice they had been given was unregulated, they had no recourse to either the Financial Ombudsman Service or the Financial Services Compensation Scheme.

As you can imagine the individuals who had persuaded these people to invest had long since gone, having taken with them significant fees and leaving their investors in a desperate situation.

It is important to note there are many excellent ‘regulated’ financial advisers in the marketplace who provide real value to their clients on a daily basis. However, as far as consumers of financial services are concerned there are some important steps that they need to take to ensure they are dealing with a suitably qualified and regulated professional.

The guidance detailed below has been taken directly from the Financial Conduct Authority (FCA) website (

‘Scammers can be articulate and financially knowledgeable, with credible websites, testimonials and materials that are hard to distinguish from the real thing. Scammers design attractive offers to persuade you to transfer your pension pot to them or to release funds from it. It is then invested in unusual and high-risk investments like overseas property, renewable energy bonds, forestry, storage units, or simply stolen outright.’ (Don’t let a scammer enjoy your retirement – Customer Leaflet:

The FCA guidance highlights some of the tactics used by pension scammers. Whilst not an exhaustive list, such tactics include:

·       Contacting you out of the blue

·       Making promises of high or guaranteed returns

·       Offering a ‘free pension review’

·       Giving you the impression that you can access your pension before age 55

·       Putting pressure on you to act quickly

As from 9th January 2019, it has been made illegal for companies to make unsolicited calls about your pension ( The ban prohibits cold calling in relation to pensions, except where the caller is authorised by the FCA, or is the trustee or manager of an occupational or personal pension scheme, and the recipient of the call consents to calls, or has an existing relationship with the caller

The FCA recommends 4 simple steps to protect yourself from pension scams:

1.     Reject unexpected offers/calls and be wary of free pension review offers

2.     Check who you are dealing with – which can be done via the Financial Services Register (

3.     Don’t be rushed or pressured into making a decision and take your time to make all the checks you need

4.     Get impartial information and advice. The Pensions Advisory Service ( provides free independent and impartial information and guidance and Pension Wise ( offers pre-booked appointments to talk through your retirement options if you are over 50.

Whilst both The Pensions Advisory Service and Pension Wise can provide free independent and impartial ‘information’ and ‘guidance’, they are unable to provide you with ‘advice’. In other words, they can tell you what you ‘can’ do (i.e. the generic options available) and not what you ‘should’ do, given your circumstances.

If you want to make the best decision for your own personal circumstances it is important that you seriously consider using the services of a regulated financial adviser.

There are some good directories available whereby you can be sure you are dealing with a suitably qualified and regulated financial adviser. These directories include Unbiased (, Vouchedfor ( and The Personal Finance Society ( You can be confident that the advisers you find on these directories are regulated by the Financial Conduct Authority and have been verified against the Financial Services Register.

To avoid any potential conflicts with the information contained within this article, it is important to note that you will find a number of firms listed on ‘Unbiased’ offer a free pension, investment or mortgage health check. This is quite normal for this directory but simply means the adviser will offer you a free initial consultation. If you proceed with their recommendations, they will levy advice charges for their services so be sure what these are at the start of the process.

You can find further guidance on The Pensions Regulator website on how to avoid pension scams (   

This article has been written for educational and awareness purposes only and does not constitute financial advice. Paul Sweeny is Managing Director of Sweeny Wealth Management Ltd. He is a Chartered Financial Planner, a Fellow of the Personal Finance Society and holds a Masters degree of Financial Planning and Business Management.

Sweeny Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority under firm reference number 821005. Investments can fall as well as rise and you may get back less than you invested.