That many workers may not have enough saved to retire when they’d planned could lead to a significant negative impact on corporates, including a “demographic bottleneck” within the workforce as older workers delay retirement, according to a report by Hymans Robertson.
The report noted that workforce mobility has increased over the last few decades. Employees often leave their pensions in the schemes of their former employers, and many employers struggle with this lack of control and visibility over benefits accrued.
Due to developments such as the upcoming Pensions Dashboard, the report claimed that employees may increasingly consolidate all of their pensions with their current employer. This could mean their past pension savings end up in the same scheme that provides their future benefits and will create more desire for pension offerings to be compelling.
Mark Stansfield, senior actuarial consultant at Hymans Robertson, says: “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.”
The report also noted that there has been a large rise in partial retirement, where employees draw from their pension savings while continuing to work.
Legal & General research shows that 2.8m former retirees have returned to work. However, it isn’t just retirement adequacy that’s causing these changes, with research by Standard Life noting some of the social reasons causing employees to return to the workforce, ranging from boredom and loneliness.