As Pensions Awareness Week approaches, a new cause of pensions apathy is revealed. New research uncovers a concerning cohort of workers who don't expect to ever retire, with 10% of employees and self-employed individuals stating they don’t plan to retire at all. The older age groups and self-employed individuals are leading the charge.
The new research, conducted by leading independent consultancy Barnett Waddingham, surveyed 5,580 UK employees and self-employed adults to investigate the effectiveness of the UK’s pension system, and in doing so unearthed the proportion of ‘never retirers’. This is true of 12% of 18-24s, the highest of the pre-retirement ages, and reduces incrementally as people approach 64. There is then a notable increase in the 65-74 age group, where 14% don’t see retirement in their future, and 28% of those aged 75 and older - though these figures are of course influenced by this cohort’s counterpart being more likely to have retired already.
Self-employed workers, in particular, are less likely to plan for retirement. More than one in five (22%) don’t expect to retire. Some of this is driven by not having enough in their pensions or savings to retire (46%), but 56% would just prefer to keep working - much higher than their non-retirer full time employed counterparts, for whom just 38% say that’s true.
The other key differentiator of retirement prospects is the type of pension people have. A mere 6% of people with a private pension/ SIPP are non-retirees. For those with a workplace pension, 6% of DC pension holders and 7% of DB pension holders have no retirement plans. However, those without a private or workplace pension (8% of the sample) are much more likely to have been iced out of retirement planning - a whopping 26% have no plans to retire.
The reasons for not planning to retire vary. For half (50%) of all workers who don’t plan to retire, it’s mainly about financial necessity—they just can’t afford to stop working. On the flip side, 42% choose to keep working because they want to stay active in the workforce. Alarmingly, 20% of respondents think they won’t live long enough to enjoy retirement.
The growing number of workers planning to forgo retirement highlights a pressing need for systemic reform. Economic uncertainty and inadequate pension savings are leaving many uncertain about their retirement future. To address this, improving retirement education and habits is crucial. For instance, by expanding auto-enrolment to include more workers and increasing minimum contributions.
Mark Futcher, Partner and Head of DC Pensions at Barnett Waddingham, said: "Each year the industry tries to encourage workers to pay attention to their pension, but ten percent of people will have switched off long before that. Why would someone who sees no prospect of retirement in their future try to save for it?
“The elephant in the room is that these people are likely wrong. Most people do retire at some point, and if they’ve under-saved and underprepared then they’ll find themselves having a very uncomfortable retirement indeed. The solution is twofold. The new Government must prioritise the ticking pensions timebomb, with an education campaign, auto-enrolment reform, and a set focus on the self-employed who risk slipping through the net.
“Employers must also take a reality check, and consider the financial realities of their employees. The workplace conversation about retirement and pensions must evolve to account for the ever more prevalent apathy and hopelessness, and member comms must evolve to offer more targeted support to workers approaching retirement. The regulators can also help by clearly defining advice and guidance so the industry can offer support at an appropriate level and cost.”
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