Pressure on employers likely as pension inadequacy becomes clear

Employers must address the issue of employee pension adequacy or face risks to their business, warns Hymans Robertson in its paper Retirement adequacy: can employers afford not to care?. The paper explains the consequences to employers from the growing reality that many workers may not have enough saved to retire when they’d planned. This could lead to a significant negative impact on corporates, including a demographic bottleneck within the workforce and stress-related productivity issues. The leading pensions and financial services consultancy warns employers to put in place strategies to help employees facing retirement saving inadequacy to avoid these risks.

Commenting on the need for employers pay more attention to employee retirement adequacy, Mark Stansfield, Senior Actuarial Consultant, Hymans Robertson, said: 

“Retirement adequacy is a real challenge that’s shaping the lives of employees and the choices they make. If people do not have enough saved, they may stay in work for far longer than the age when they want to retire. This creates pressure on them and on their employer. Corporates should step forward and play a stronger part in helping their staff reach better outcomes. Through reviewing pension offers, improving messaging to staff, and giving more help to workers who want to understand and grow their savings, they can begin to alleviate the problem. If employers want to protect their future and support a stable and strong workforce, they must take this issue seriously.

“We know staff care about pensions. They see the pension offer from an employer as one of the most important parts of their reward. As the state of retirement savings becomes clearer through new tools such as the Pensions Dashboard, people will expect more support. Employees will now be able to see the potential inadequacy of their total retirement savings. This will place a greater focus on employers to step in and help. Employees will want simple words, clear steps, and pension plans that make sense for their own lives. If corporates do not offer this, they risk losing the trust of their staff and may find it harder to bring in new talent.

“There is also a wider point. The way people retire is changing. We see more people moving back into work after a short time away. We see older staff working part time to help their income last. We see more people trying to balance work, care, and money with great strain. Employers have a chance to ease this pressure by helping staff save in a steady and confident way. This support can bring real value to workers and can also help the firm plan for the future with more clarity.

“If employers act now, they can place themselves in a better position for the years ahead. They can show that they care about the long term. They can build a workplace where staff feel safe, valued, and ready for the next stage of life when the time is right. Action today can bring real gains for both employees and employers.”

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