Employees lack confidence about retirement planning
The insurers Working Lives Report 2023: Fit for Future found those closest to retirement are less confident than their younger colleagues about their finances for when they stop work.
More than one quarter (26%) of this over the age of 45 said they lacked confidence about retirement planning compared to one in five (20%) 16–44-year-olds.
Almost four out of 10 employees (39%) expect their pension will provide enough money to “just get by”. Those who anticipate a comfortable retirement number only 20%, while one in 10 (10%) – which could be and many as 2.85 million employees – have no idea.
Those without any idea whether they will have a comfortable retirement are more likely to be in the group closest to retirement age – 14% of those over the age of 45 – than those under 45 (10%). This could equate to around 1.68 million employees over the age of 45 who feel they face an uncertain future.
The most positive employee group are those aged 16-24, with almost a third (29%) confident their retirement will be comfortable. This falls with each age group, with just over one in 10 (13%) over the age of 55 saying their pension will be enough to retire comfortably.
Cost of living has increased anxiety
“It is desperately concerning that many pension savers are overwhelmed by the choices they face and are sleepwalking into retirement.”
Emma Douglas
The cost of living crisis has made most employees (72%) more anxious about their finances, with women more likely (78%) to feel this anxiety than men (65%).
Emma Douglas, director of workplace savings & retirement, said: “Pension freedom legislation has given people more flexibility and choice when it comes to choosing how to use savings at retirement, but it has also created a wealth of options. It is desperately concerning that many pension savers are overwhelmed by the choices they face and are sleepwalking into retirement.
“This is a particularly financially challenging time which makes it more important than ever that people understand their pension savings and the retirement options available to them.
“Whether you want to consolidate your pensions into one pot; work out whether drawdown or an annuity or a blended option is right for you; or how to make sure your pension savings last throughout retirement; getting the right advice, guidance and support is essential.”
Employees want help to plan
Four in every five employees (79%) would like more support from their employer about planning for a financially comfortable retirement. Of those, 41% would like more information on how to build a pension pot, and almost half (45%) would like more information on how to make a pension last through their retirement.
However, of the employers surveyed, 20% only provide the bare minimum of retirement planning information that is required of them.
Douglas added: “We are calling on government to support pension savers by ensuring they get access to some form of financial advice at retirement which may be full or simplified advice depending on their circumstances.
“We are also asking for the removal of regulatory barriers to allow providers and other regulated entities to deliver more effective support, such as personalised guidance. We also feel more can be done to support employers in promoting pension advice and guidance through workplaces.”
