The research, published on 9 January, indicated that employees had not considered the length of their retirement, or the possibility that they might develop a serious illness or require care in their retirement plan.
“HR teams should be at the forefront of educating employees about retirement costs, to empower them to take charge of their own financial futures,” Riaan Van Wyk, Barnett Waddingham's senior consultant, told HR magazine.
“While employers aren't obligated to fund employees' retirement care needs, they do have a duty of care to support their financial wellbeing,” he said.
The research revealed a discrepancy between employees’ expectations from their workplace pension plans and the cost of their retirement.
On average, employees expected £20,435 from their workplace pension plan per year, while the cost of care could be up to £73,320 per year, according to estimates from care home review site carehome.co.uk.
According to Barnett Waddingham's findings, 28% of employees had not considered the possibility of getting sick into their retirement plan; 43% had thought about it but had not factored it in.
A third (31%) of employees had not considered that they might need to fully go into care, when making their retirement plan.
Read more: Inadequate pension saving soars
Employees could struggle to save for all care scenarios, Steve Cameron, pensions director for pensions provider Aegon, commented.
Speaking to HR magazine, he said: “Unfortunately, it’s extremely difficult to properly plan for all possible care scenarios, particularly bearing in mind that the cost of care can be huge.
“It is also the case that many people already aren’t saving adequately for retirement, even before factoring in potential social care costs.”
In July 2024, a report by pensions provider Scottish Widows revealed that the number of people not saving enough for a minimum retirement lifestyle has increased by 1.2 million people (3%) in the last year.
Nearly two fifths (38%) of people were not on track for what the Pensions and Lifetime Savings Association deemed a “minimum retirement lifestyle”.
HR professionals should educate employees about how to track their retirement targets, to avoid inadequate savings, Cameron advised.
He added: “Employers and HR departments can play a role in educating people on what they’re on target to receive from their workplace pension combined with the state pension, and how this compares with what an individual may aspire to.”
Read more: One in 10 returns to work after retirement
Education should highlight saving opportunities and the impact of care eventualities, Van Wyk noted.
He said: “To help employees save, organisations should highlight the impact of care eventualities on retirement savings and stress the importance of pension contributions and maximising employer-matched contribution opportunities.
“In addition, flexible saving schemes such as workplace ISAs should be explored.”
Cameron also called on the government to put a cap on the cost of care.
He said: "The government scrapped plans put forward by the Conservatives when in power to put an overall cap on how much an individual will need to pay for care should they need it.
"We very much hope the recently announced Social Care Commission under Baroness Casey will revisit these plans which in turn build on Andrew Dilnot’s plans from over a decade ago."
For its 'The At Retirement Reckoning' report, Barnett Waddingham commissioned Censuswide in July 2024 to survey 5,032 UK employees and self-employed people aged 18 and over. At least 3,000 respondents were aged over 50; all respondents planned to retire in their lifetime.
