Fail to plan…plan to fail – the UK’s ticking retirement time bomb
In the UK and throughout the EU, a crucial stage of preparing an entire generation of employees for the fact they will live longer but with less money is well underway.
This will, of course, mean people will have to work longer, particularly as the UK government is pursuing a policy of increasing the State Pension Age. Indeed, the EC White Paper noticeably links the State Pension Age to average life expectancy.
The Managing Director of Workplace Solutions, part of deVere Group, Simon Chrystal states: “What we’ll see in the future is employers with an ageing workforce, who are staying in employment out of necessity, as they simply cannot afford to retire.
“The biggest survey undertaken in the UK to date, the Aegon Retirement Behaviours Survey, reveals that just 22 per cent of the working population believe they will be in a position to move from full-time employment to full-time retirement.”
Alarming stats indeed. And a monumental change in retirement behaviour when compared to previous generations. It would seem that gold watches and gold plated pensions have been resigned to the history books.
Mr Chrystal goes on to say: “Auto-enrolment is a step forward, as it will drive money into pensions. Nevertheless, will it lead individuals to realise that they do, in fact, not have enough money to retire?
“Or, conversely, will it highlight a mistaken belief that individuals are not saving sufficiently, and the state will in fact provide for a reasonable standard of living?
“As such, making low contribution levels – albeit with employer funding – without the correct tools to help employees understand their pathway to retirement, and good quality communication and advice, it will likely not achieve a great deal.”
Even though there are numerous financial guidance and analysis models available, particularly online, evidence implies that they don’t and can’t work. Particularly within the set timeframes available to employers, in order to shape labour markets to focus on innovation rather than stagnation.
Simon Chrystal concludes: “We make a difference at Workplace Solutions, and build targeted strategies in order to help employees focus on a new pathway to retirement. Individuals working longer doesn’t necessarily mean they have to work to the same patterns, but rather on a steady move to retirement, suiting both employer and employee.
“As a result, employees should be able to enjoy extra years in retirement. In addition, whilst still working, employees will continue to be motivated in later life, and their invaluable experience can be used to support the necessary innovation to operate a successful business.”