With today (15th September 2019) being Pensions Awareness Day 2019, finance and HR professionals offer warnings about the “pension crisis”, and how certain groups are more likely to face a lack of retirement savings as well as how this can be improved.
According to the MHR, an HR and payroll provider, around 4.7 million workers that are part of the gig economy, risk having no pensions. Due to this, MHR is urging the Government to expand automatic enrolment for workplace pensions which would include those working in the gig economy.
Neil Tonks, legislation manager at MHR, said:
Gig workers often don’t have access to a workplace pension because they’re considered self-employed. In many cases they also choose not to put money aside into a private pension, possibly because they can’t afford to do so. Trapped in low-paid work and not saving for the future, they risk being forced to work in their retirement years because they have no private pension and haven’t accrued enough Qualifying Years on their National Insurance record to claim the full state pension.
There are a number of possible options, such as expanding auto-enrolment to include the gig economy, or introducing a new ‘sidecar’ scheme for self-employed workers which reflects their variable income and allows them to put money aside for their pension. Implementation of these would be a big help in enabling gig economy workers, and other self-employed people, to build up a pot for their retirement and long-term security.
Additionally, Close Brothers Asset Management, a provider of financial planning advice and discretionary investment services, identify women to be worse off than men when it comes to pensions. As, 54 per cent of men say that they are not prepared for retirement, with this figure rising to almost three quarters of women (74 per cent).
Almost half (45 per cent) of those aged 55 or over say that funding their retirement is one of their top three money worries. Additionally, just under a third (32 per cent) of those approaching retirement say that they expect to need to work in retirement in order to supplement their income.
Jeanette Makings, head of financial education at Close Brothers, said:
Auto-enrolment has had a really positive impact on the pension savings landscape in the UK. But there’s still a long way to go to close the savings gap and there is no room for complacency as the minimum contribution levels are unlikely to provide a sufficient pension for a comfortable retirement for most people.
A workplace pension is a significant part of an employee’s benefits package and employers can play a key role in helping their workers to understand the value of this benefit and to encourage continuous engagement. By taking simple steps such as offering retirement planning calculators, using clear, simple language and layout in pension statements, providing access to financial education, employees can improve their understanding, see how to take control and see the benefits of being more proactive with their retirement savings plan.
Melanie Robinson, senior HR director at ADP, another HR and software provider believes this is a good day to boost the financial wellbeing of your employees.
Ms Robinson said:
Pension Awareness Day, is an important reminder of the importance of planning financially for the future, and an opportunity to think about the employer’s role in supporting their teams. ADP’s recent Future of Pay study has revealed that almost all (98 per cent) employers believe that their employees’ financial wellness has a direct impact on their business performance – especially concerning employee productivity (67 per cent) and engagement (62 per cent). This emphasises the important role that both HR and payroll teams play in supporting employees in their financial planning for the future, and also highlighting how this impacts business performance in the here and now.