One out of 10 workers aren’t planning to retire — with a lack of pension savings cited as being the main cause, according to new research from Barnett Waddingham.
The consultancy firm found that this proportion more than doubled among the self employed — to 22 per cent. The number was also higher among older workers in the 65-74 age group, who were already working past retirement age.
When asked why they won’t retire, 50 per cent of respondent cited financial necessity, 42 per cent said they preferred to keep working, while 20 per cent believe they won’t live long enough to retire.
Barnett Waddingham found that overall the percentage of people who say they will never retire generally falls as people approach 64, but there is a significant jump after this age.
When looking at self-employed workers, the research found that the high-levels of those expecting never to retire was partly driving by a lack of pension savings, but a higher proportion — 56 per cent — said they would just prefer to keep working. This is far higher than among the general population.
The research found that the other key differentiator of retirement prospects is the type of pension people have. Only 6 per cent of people with a private pension/ SIPP are non-retirees. For those with a workplace pension, 6 per cent of DC pension holders and 7 per cent of DB pension holders have no retirement plans. However, 26 per cent of those without a private or workplace pension have no plans to retire.
Barnett Waddingham says this research, which comes ahead of Pension Awareness Week, highlights a pressing need for systemic reform. Economic uncertainty and inadequate pension savings are leaving many uncertain about their retirement future.
It says that improving retirement education and habits is crucial to address this issue. This includes expanding auto-enrolment to include more workers and increasing minimum contributions.
Barnett Waddingham partner and head of DC pensions Mark Futcher says “Each year the industry tries to encourage workers to pay attention to their pension, but 10 per cent of people will have switched off long before that. Why would someone who sees no prospect of retirement in their future try to save for it?
“The elephant in the room is that these people are likely wrong. Most people do retire at some point, and if they’ve under-saved and underprepared then they’ll find themselves having a very uncomfortable retirement indeed. The solution is twofold. The new Government must prioritise the ticking pensions timebomb, with an education campaign, auto-enrolment reform, and a set focus on the self-employed who risk slipping through the net.
“Employers must also take a reality check, and consider the financial realities of their employees. The workplace conversation about retirement and pensions must evolve to account for more prevalent apathy, and member comms must evolve to offer more targeted support to workers approaching retirement.
“The regulators can also help by clearly defining advice and guidance so the industry can offer support at an appropriate level and cost.”
