Employers that ignore pension inadequacy risk storing up serious problems for their business, according to a new paper from Hymans Robertson.
The consultancy warned that retirement income shortfalls could hit companies hard by creating a demographic bottleneck in the workforce and driving stress-related drops in productivity.
Employers should act now by putting strategies in place to support staff facing inadequate retirement savings and to avoid these mounting risks. Options include reviewing pension offerings and providing more information to staff about how to grow their savings, said Hymans Robertson’s Mark Stansfield.
“If employers want to protect their future and support a stable and strong workforce, they must take this issue seriously.”
Mark Stansfield, Hymans Robertson
Stansfield, a senior actuarial consultant, explained: “Retirement adequacy is a real challenge that’s shaping the lives of employees and the choices they make. If people do not have enough saved, they may stay in work for far longer than the age they want to retire. This creates pressure on them and on their employer.
“Corporates should step forward and play a stronger part in helping their staff reach better outcomes… If employers want to protect their future and support a stable and strong workforce, they must take this issue seriously.”
Stansfield added that staff view the pension offer from an employer as one of the most important parts of their reward, and this importance will increase when people are able to view their savings through pensions dashboards.
“This will place a greater focus on employers to step in and help,” he said. “Employees will want simple words, clear steps, and pension plans that make sense for their own lives. If corporates do not offer this, they risk losing the trust of their staff and may find it harder to bring in new talent.”
He also pointed to research from Legal & General showing that around 2.8 million people are estimated to have returned to work after retiring, while separate research has shown a rise in older workers moving to part-time work rather than retiring completely.
“We see more people trying to balance work, care, and money with great strain,” Stansfield said. “Employers have a chance to ease this pressure by helping staff save in a steady and confident way. This support can bring real value to workers and can also help the firm plan for the future with more clarity.”
He explained that immediate action can put employers in a better position for the years ahead, bringing “real gains for both employees and employers”.
