Older workers deferring retirement due to inadequate retirement savings is a concern for 49 per cent of employers, with 62 per cent believing retirement adequacy has become a more important issue in the last few years, a survey for Towers Watson has found.
But the research shows that employers are sceptical about how effective the latest government pension reforms will be in helping workers to retire. Just 30 per cent of employers think that defined contribution pension plans will now be better able to deliver an adequate standard of living in retirement, while just 42 per cent think that the new DC pensions freedoms will be more effective at managing employees into retirement.
The survey, of over 100 employers, found 74 per cent of organisations believe retirement adequacy will become a more important issue in the future, yet only one in ten employers believe their employees know how much to save in retirement. A third of employers expect to place more emphasis on workers’ ability to retire in the coming years.
Phil Percival, head of Towers Watson’s Fit Age programme, says: “More people in the UK are faced with having to delay their retirement, with potential consequences for companies that don’t encourage their employees to take control of their financial futures. Employer concerns are not without foundation. Employees that need to retire later report higher stress levels and can be less engaged. Gaps in financial wellbeing and retirement readiness create the risk for an employer of a distracted workforce with higher costs. Affected employees may also contribute to blocked career paths, increasing the risk of losing critical talent.
“Employers are understandably concerned that despite the new pension freedoms giving employees more choice over their retirement, the same problems remain when it comes to encouraging people to save enough for their retirement. Education, education, education is the key to overcoming these barriers and helping employees clearly see the financial goals they need to achieve to meet their expectations for retirement.”