Employer concern is growing about the number of older workers who are planning to delay retirement due to sparse pension pots. A survey conducted by the professional services firm, Towers Watson, also uncovered employer concern about whether enough is being done to prepare an aging workforce for retirement, as well as misgivings about government policy.
The survey found that nearly half of UK employers (49%) are concerned about older workers deferring retirement, while only 1-in-10 think their workers know how much to save for what could be a lengthy retirement.
“There are potential consequences for companies that don’t encourage their employees to take control of their financial futures,” commented Phil Percival, who runs Towers Watson’s FiT Age programme. “Gaps in financial well-being and retirement readiness create the risk for an employer of a distracted workforce. Career paths are also blocked, prompting the potential loss of critical talent.”
Only 4-in-10 of employers interviewed believed that their employees knew what to expect from their company pension scheme and as a result, nearly a third of employers are expecting to place more emphasis on workers’ ability to retire in the coming years. This lack of knowledge, combined with a fear dealing with a complex system, is believed to be contributing to retirement avoidance.
A more concentrated effort on the part of government to tackle employment preparedness, such as defined contribution (DC) pension plans, was met with ambivalence from employers. Less than a third thought that defined contribution (DC) pension plans would deliver an adequate standard of living in retirement.
The study also found that less than half (42%) of those interviewed thought that the new DC pensions freedoms would be more effective at managing employees into retirement. Only 3-in-10 (28%) were hopeful that younger employees will contribute more to their DC plans as they progress through their working life.
“Education, education, education is the key to overcoming these barriers,” Percival concluded. Employers must take responsibility for informing and educating workers early on how to achieve the retirement income they want.”