The majority of employers (58 per cent) expect to help their employees make more informed choices about their finances in preparation for leaving the workplace, new research has found.
But although 85 per cent of the 300 decision-makers polled by financial consultancy Mattioli Woods believed their staff required quality financial education, almost half (45 per cent) admitted that they only contributed the statutory minimum of 1 per cent to pension pots.
More than 35 per cent of respondents said they felt it was the government’s responsibility to provide the necessary financial education to employees, and just under half (47 per cent) were concerned that workers were not making adequate provision for their retirement, according to the 2017 Employee Benefits Insight Report.
Nathan Long, head of corporate pension research at Hargreaves Lansdown, told People Management that although it is now “dawning on” employers that financial education is a must have, rather than a nice to have, the ageing workforce may mean more employees are unable to retire as soon as they would like.
“Employers are becoming more aware that they could end up with a sizeable number of older staff who simply cannot afford to retire. Workplace financial education flags these issues to staff so they can take control of their own future,” he said.
Charles Cotton, reward and performance adviser at the CIPD, said that because many employers currently only make minimum contributions, an opportunity has been created for HR to “challenge the belief that pension contributions are not an investment priority compared to other business or people spending commitments”.
Cotton said organisations should consider creating a financial wellbeing strategy, which looks not only at rewards but financial awareness too. “The industry and the government need to think about whether pensions are the only way to retire, and whether millennials would prefer a savings product that’s more flexible,” he said.
A separate piece of research by Aviva estimated that 19 per cent – the equivalent of almost two million older workers in the UK – may not be able to afford to retire because somebody else is financially dependent on them. The main reasons given by over-50s for remaining in work were the financial needs of their children (32 per cent) or parents (12 per cent).
However, two in five (40 per cent) said they were motivated to stay in work because of job satisfaction and fulfillment. This figure rose to 53 per cent among 65 to 69-year-olds and two thirds (66 per cent) of over-70s. Among those retiring later, just over a third (34 per cent) were doing so because they enjoyed the mental stimulation of their job, while 43 per cent blamed it on insufficient pension savings.
Four in 10 (39 per cent) workers believe they will never be able to retire, according to figures from research company Mintel, and a poll from Aegon has suggested that people in the UK expect roughly a third (32 per cent) of their retirement income to be funded by workplace savings, further reflecting the importance of saving for retirement through a workplace savings scheme.