A third of UK workers aged 55 plus have delayed they retirement since the pandemic, with four out of 10 workers in this age group concerned they will not be able to retire.
A new Close Brothers’ report looking at financial wellbeing in the workplace found that for many UK employees decisions around retirement are laden with confusion, indecision and anxiety.
It says the pandemic and subsequent economic uncertainty has resulted in greater insecurity around retirement. In total a a quarter of employees (of all ages) have changed their retirement date recently, with most opting to deferring it. One in 10 workers said they were currently “undecided, uncertain and anxious” about retirement plans.
Those approaching retirement are even more likely to have made changes to their plans
Of those over 55s who pushed their retirement date back, the main reason was that they simply cannot afford it right now. Conversely, of those in the same group who have brought their retirement date forward, most cite that ‘life is too short’.
The uncertainty has meant that retirement planning is falling by the wayside. One in four (25 per cent) employees admit their retirement plans are not on track, while one in 10 said they have no retirement plans at all. The report also found that 27 per cent of employees over the age of 55 feel their retirement plans are not on track currently.
This ongoing uncertainty around retirement is having consequences within businesses which could have cost and retention impacts over time. Companies are currently experiencing blocks on succession (22 per cent), and while companies do value retaining experienced workers (28 per cent), there are some side-effects in engaging a higher proportion of senior workers for longer, with a higher average payroll (23 per cent) and an increase in healthcare costs (18 per cent).
Companies are also experiencing difficulties in recruitment and talent development (30 per cent), because there isn’t the turnover of senior personnel necessary to incentivise young, talented staff members.
Amongst employees, there is appetite to get plans in place, but many do not know where to start. The report says that at the heart of the problem is a disconnect between what employees want and need to effectively plan for retirement, and what’s being provided by companies.
Nearly half (43 per cent) of employees want pension advice, but only a small number of companies offer it; just 22 per cent of organisations offer financial advice with a pension provider, 17 per cent offer financial advice with a financial education provider and just 16 per cent give pre-retirement seminars.
Close Brothers managing director of wealth planning Daniel Swift says “Given the ongoing economic uncertainty, coupled with the fact retirement is now firmly in the hands of every individual, anxiety around retirement is writ large in our report. It is a weighty responsibility and the perils of getting it wrong are significant.
“What is clear from our research is that as retirement planning is a career long commitment, and as it is now not only reliant on pensions, people need much more support and guidance throughout their career, in particular when it comes to navigating the complex decision-making when approaching retirement. Employers spend a lot of money on their workplace pension schemes, but need to do more to ensure that their employees are fully informed, fully engaged and fully supported.”
