COVID-19 stalls UK workers' plans for retirement
Employers need to do more to support workers’ futures and financial security, says a new report.
According to the Aegon Center for Longevity's The New Social Contract: Age-Friendly Employers, 73% of UK employees are offered a retirement plan by their employer yet just 30% have a backup plan.
The average worker also expected that they would need 67% of their current income for retirement, yet only 23% said they are currently on track to save that amount.
The report predicted that the coronavirus pandemic will worsen people’s readiness for retirement and therefore said employers need to do more to help people prepare.
Steven Cameron, pensions director at Aegon, said: “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.”
And understanding of compounding interest, inflation, and risk diversification was a quality that only 24% of surveyed UK workers were found to have. A further 13% also had a written retirement strategy. A lack of both of these elements, the report suggested, could also be putting people at a disadvantage.
To help employers provide the right support to their workers, the ACLR created a list of actionable pieces of advice including encouraging businesses to design flexible retirement, health and welfare benefits and training, education, or wellness programs into financial literacy.
Encouraging an age-friendly workplace by recognising the value of people of all ages was also recommended, given 34% of respondents said their employer is currently doing nothing to facilitate a multi-generational workplace.
Speaking to HR magazine Aegon’s HR director Gill Scott added: “Employers can play a significant role in designing workplace environments that help stimulate both greater savings and healthier lifestyle choices, as well as increasing awareness among workers about the connection between the two.
"The workplace is a natural starting point in any discussion linking wealth, health, and long-term wellbeing.”
The ACLR report is based on findings from the ninth Annual Aegon Retirement Readiness survey of 14,400 workers and 1,600 retired people around the globe, including 1,000 people based in the UK, 900 in employment and 100 retirees. The survey was conducted online between January 28 and February 24, 2020.