“While the number of people receiving furlough support has gradually diminished, the latest figures show that there were nearly 1.6m people still in receipt of furlough at the end of July. As the scheme winds-up it will put employers, the jobs market and also people’s savings habits to the test.
“It’s as yet unclear whether the re-opening of the economy will mean those still on furlough will have jobs that they can pick back up, or whether their roles are now at risk of redundancy. We’ve heard a lot about labour shortages in certain sectors but that doesn’t necessarily mean those out of work will rush into roles they may not want or may be unsuitable for.
“One remarkable outcome from the pandemic has been the relatively minor impact on workplace saving trends. Despite the number on furlough peaking at 8.9 million in early May 2020 and a total of 11.6 million jobs furloughed since the scheme started, workplace pension participation has remained resilient. Very few people have opted out of their workplace pension and the already-low ‘opt out’ rates even saw a slight fall over the last year.
“However, any large rise in unemployment following the wind-up of the furlough scheme could put the brakes on the significant progress of auto-enrolment and workplace pension participation rates. Individuals who lose their job not only face a loss of income but will also no longer contribute to their workplace pension, and benefit from ‘free’ money from their employer. Gaps in pension saving will only exacerbate the differences in the financial health of those whose jobs have continued unaffected during the pandemic and those who have faced difficulties.
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