Research conducted across 3,000 respondents found that just 9 per cent are contributing the recommended 16 per cent of salary into their pensions yet 43 per cent think they will retire before the age of 65.
Barnett Waddingham’s latest edition of its Generation WHY? Research found 58 per cent of respondents do not have enough savings to last more than 3 months if they lose their income.
Just 17 per cent of respondents did not know what auto-enrolment is but 48 per cent are not aware that auto-enrolment minimum contributions are increasing. The research found 41 per cent do not know what percentage of their salary they should be contributing to provide the required level of income in retirement, only 12 per cent know what funds their pension is invested in and just one in five understand their choices at retirement.
The research found 55 per cent of respondents prefer flexibility in workplace pension schemes, rather than a guaranteed income in retirement and 28 per cent would like to see more flexibility in the form of a savings account arrangement that is accessible throughout life.
Barnett Waddingham head of workplace health and retirement Damian Stancombe says: “It is well known that the UK has a retirement income shortfall problem. The immediate financial concerns of today are hindering financial wellbeing and stopping many planning for retirement. Having today under control gives us a better chance of understanding our needs for tomorrow, and also those of ‘one day’ when we enter retirement.
“The first step in this process of gaining control is to be aware of the state of our financial health and the one stat that stood out is that 97 per cent suggest they are. Through involved education and planning we can then be more certain of what is required in order to achieve our goals.
“A key theme throughout the research is that there seems to be a breakdown in the relationship between the employer and the employee. People are drowning in financial woes and the employer is not close enough to understand. But more than this, employees don’t trust the company they work for to help them or have their interests at heart. Instead of asking for help, they just wave. This will not be a missed opportunity if employers get closer to their people. Cross the divide, shorten the distance and you’ll be able to support your employees appropriately.
“Organisations need to support and encourage their employees in their efforts to deal with debt, day-to-day living and housing. This, together with pension provision and education should form the basis of a holistic workplace financial wellbeing strategy that will benefit both the employer and employee.”