Recent research carried out by Buck, the leading consulting, technology, and administration services firm specialising in pensions and employee benefits, has revealed that over two-fifths of employers (44%) are concerned about the long-term impact on the business if employees cannot afford to stop working. The risks of an ageing workforce working because it has to — rather than because it wants to — have increased following the removal of the default retirement age in 2011, making it increasingly necessary for companies to provide adequate pension education and support for their staff.
However, most DC pension schemes do not have adequate levels of contributions needed to maintain a similar standard of living in retirement for many employees. The results showed the expectation of a shared responsibility for retirement saving, with 40% of employers wanting to empower workers to be self-sufficient when it comes to their retirement plans in order to avoid issues nearer the time.
A key part of this is access to education and support, with 84% of employers wanting to ensure staff had access to online resources. This supports the earlier results of Buck’s global wellbeing research which found that retirement planning tools are the most popular financial wellbeing component in Europe. The research also revealed that one third (33%) of respondents wanted to provide wider workplace savings options, either for high earners or their whole workforce, reflecting the emergence of a more holistic approach to workplace savings, and the integration of pensions and financial wellbeing.
Mark Pemberthy, Head of DC and Wealth at Buck in the UK comments: “Our research confirms that the impact of an ageing workforce is at the forefront of employers’ minds, and that more has to be done to tackle the problem head-on. Current DC contribution rates are not sufficient to help staff manage post-work life, and employers have an opportunity to help address this. Companies have recognised this and are increasingly willing to offer a broader range of tools help employees learn about saving for retirement and implement workplace savings strategies to make sure employees can take a joined-up approach to saving for their future. At Buck, it’s our goal to support the success of our clients’ benefits and pension strategies, and the wider wellbeing of their employees. This is a hugely important step towards tackling the issue of an ageing workforce that could become a significant productivity challenge for the UK.”
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