The report, The New Social Contract: Age-Friendly Employers, explores the vital role of employers in helping workers financially prepare for retirement, a role that has become even more crucial albeit precarious amid the coronavirus pandemic. The New Social Contract: Age-Friendly Employers is based on findings from Aegon’s 9th annual global survey of 15 countries spanning the UK, Europe, the Americas, Asia, and Australia that was conducted in 2020.
“Faced with the impact of the COVID-19 pandemic and a stalling of retirement readiness globally, the need for a new social contract across governments, employers and individuals is now more apparent than ever,” said Steven Cameron, Pensions Director at Aegon. “As the employer-employee relationship evolves, the role of employers in helping workers prepare for retirement extends beyond offering retirement plans and financial benefits – employers also influence workers’ skills development, education and overall well-being.”
“Today, individuals are expected to save and invest for an increasing proportion of their retirement income. However, many people find themselves ill-equipped to do so and will likely face further financial pressures in the wake of COVID-19,” said Mike Mansfield, Program Director for ACLR. “Findings from Aegon’s 9th Annual Retirement Readiness Survey confirm that individuals need more support to harness their true savings potential to adequately prepare for their financial future.”
Age-Friendly Employers and How They Can Influence Retirement Security
Age-friendly employers embody an inclusive, diverse and multigenerational workforce, and foster an environment in which workers of all ages have the ability to succeed. The survey findings identify ways in which employers can support their employees to extend their working lives and financially prepare for retirement. The following are options to consider now and in the future, as the broader economic picture improves:
• Cultivate an age-friendly workplace that recognizes the value and contributions of workers of all ages. When asked about initiatives their employers have in place to encourage a multigenerational workplace: 33 percent of workers globally (34 percent UK) indicate their employer is doing nothing to facilitate a multi-generational workplace.
• Provide retirement, health and welfare benefits — and design them with portability in mind so that workers can maintain them as their employment situation changes. Just over half of workers globally (52 percent) are offered a retirement plan by their employer (73 percent UK). The UK’s figure is the highest in Europe and second only to India globally, demonstrating the success of Auto Enrolment. Fifty-eight percent of workers globally agree with the idea that a “job for life” is a thing of the past (66 percent UK).
• Offer retirement planning services and financial advice. Only 17 percent of workers globally have a written retirement strategy (13 percent UK) — and 35 percent have a backup plan in the event they are unable to continue working before they reach their planned retirement age (30 percent UK).
• Promote financial literacy through training, education, or financial wellness programs. Only 28 percent of workers globally could answer all the “Big Three” financial literacy questions developed by leading academic experts Drs. Annamaria Lusardi and Olivia Mitchell that test knowledge of compounding interest, inflation, and risk diversification (24 percent UK).
• Encourage health and well-being by offering a workplace wellness program. When asked what health-related attitudes and behaviors apply to them, 59 percent of people globally indicate they eat healthily (64 percent UK), 58 percent avoid harmful behaviors (59 percent UK), and 52 percent exercise regularly (53 percent UK). More than eight in 10 workers are interested in one or more types of workplace wellness programs (86 percent global, 78 percent UK).
• Offer flexible work arrangements to help workers more easily balance their jobs and their personal lives. Globally, 50 percent of workers report having flexible working hours (54 percent UK). Only 28 percent of workers indicate their employers offer pre-retirees the option to move from full-time to part-time work while phasing into retirement (31 percent UK).
• Facilitate lifelong learning to help workers keep their job skills up to date and relevant. Almost three in four workers globally (74 percent, 75 percent UK) are offered one or more types of training to help them keep their skills current and to remain employable in the future. Twenty-four percent are reimbursed for continuing education (15 percent UK).
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