The YouGov survey that fed into the report revealed that a third (34%) of people thought they were preparing adequately for retirement. Meanwhile 38% reported not being on track for what the Pensions and Lifetime Savings (PLSA) deemed a “minimum retirement lifestyle”.
The report, published yesterday (23 July), noted that the situation was due to the cost of living outgrowing wage growth.
“It’s clear employers must play a more active role in addressing this crisis,” Lily Megson, policy director at retirement advisory My Pension Expert, told HR magazine.
“While the workplace auto-enrolment policy has significantly increased participation across the UK, it’s important to recognise that it can lead to less engagement with pension planning as many employees default to minimum contributions.
“Employers should think about how they can implement other initiatives that encourage employees to boost pension contributions, and more generally ones that foster financial wellbeing in retirement.”
Read more: New recommendations to increase support for older workers
An report published in April 2024 by socialist organisation the Fabian Society revealed that nearly one million people aged 60 to 65 in the UK were living in poverty due to being without work, working reduced hours, having low earnings, having inadequate benefits or not taking up benefits, and not having enough retirement savings.
According to the Scottish Widows report, 75% of current retirees say that the state pension plays a vital role in helping them pay for everyday costs. However 12% of people were not convinced that this level of help would be available to them by the time they retire.
Increased pensions contributions by employers could help employees save for retirement, suggested Joe Dabrowski, deputy director of policy at PLSA.
“The general rule of thumb for the typical worker is to try and save 12% over a lifetime to be on track for the retirement they’d hope for. Supporting employees to understand this and the benefits of their scheme, including matching contributions, is really important,” he told HR magazine.
“All employers need to provide automatic enrolment (AE) for all employees, regardless of age, salary or employment status. Ideally, employers should enrol employees from the first pound earned, rather than according to band earnings, aligning with proposed AE reforms which particularly benefit lower earners.
“Employers should strive to provide good pension schemes that go beyond the minimum regulatory requirements. The Pensions Quality Mark recognises those which go above and beyond, such as increasing contribution rates and offering attractive matching benefits.”
Moreover Scottish Widows found that 54% of people thought they would have to work longer than they wanted to – on average by seven years. Just 27% reported that they did not think they would ever be able to retire.
The state pension age is currently 68, but in February 2024 the Resolution Foundation predicted that it would need to rise to 71 by 2050 to remain affordable.
Read more: One in 10 returns to work after retirement
Scottish Widows' research outline that people aged 18 to 29 want to retire at 61, but were prepared to work until they reached 64 if necessary.
Employers have a responsibility to educate employees on how to plan for retirement, said Steve Cameron, pensions director at Aegon.
Speaking to HR magazine, he stated: “Employers can play a hugely important role in educating their employees on retirement planning as well as making valuable pension contributions.”
Megson suggested that employers could do this by offering access to workshops and access to financial advisors.
She added: “Boosting financial literacy is a crucial element. Employers could organise workshops and seminars or provide educational online resources that highlight the importance of pension contributions and the long-term benefits of consistent saving.
“Facilitating access to independent financial advisors (IFAs) is another step employers can take. Consulting with an IFA can help employees visualise the importance of increasing their pension contributions and provide them with savings strategies tailored to their individual circumstances.”
Scottish Widows commissioned YouGov to survey 5,072 UK adults between 21 March 2024 and 5 April 2024.
