Financial security is a key concern for employees
Just over two-fifths (41%) of respondents believe uncertainty about how to make the best decisions when accessing pension benefits is an area of concern for their employees. While this continues to top the list of retirement concerns affecting respondents’ workforces, it has fallen steadily since 2014, when 60% of respondents cited uncertainty about how to make the best decisions as a key concern.
The percentage of respondents that say employee uncertainty about what to do with their pension savings has also fallen steadily. This year, more than one-third (39%) highlighted it as a concern among their workforce, compared to 41% in 2016 and 52% in 2014.
Just over one-fifth (23%) see uncertainty about how to save for retirement as a cause for concern among staff. The percentage of respondents that see this as an issue among their employees has remained relatively steady over the years, being cited by 20% in 2016 and 26% in 2015. It may be that employers' provision of communication and education about pension saving post auto-enrolment and since the pension flexibilities came in to effect in 2015 have helped to increase employees' knowledge of the options available to them.
Despite this, 41% highlighted an issue around the level of concern about financial security in retirement, although this is an improvement on previous years. In 2016, for example, 53% cited this as a worry, while 52% did so in 2014.
One-quarter of respondents (25%) also indicated concern over the cost of financial advice.
What concerns respondents' staff the most regarding retirement
Sample: All respondents (155)
Lack of money in retirement 43%
Concerns about their financial security in retirement 41%
Uncertainty about how to make the best decisions (annuity, drawdown, lump sum) 41%
Uncertainty about what to do with pension savings 39%
Lack of a financial plan 36%
Concern about the cost of advice 25%
Do not know 24%
Uncertainty about how to save for their retirement 23%
Lack of knowledge of where to go for help or advice 21%
The end of their career 20%
The ability to provide for children and grandchildren 16%
Lack of access to guidance and support 16%
Deteriorating health 16%
Lack of purpose 12%
Lack of social interaction with peers 10%
Uncertainty about their organisation's ability to offer access to their pension funds through drawdown 6%
Other 3%
Assessing the impact of Brexit
More than a third (39%) of respondents believe it is too early to tell what impact Brexit will have on pensions. While just under one-third (32%) believe that the outcome of the June 2016 referendum on the UK’s membership of the European Union (EU) will have an impact on pensions, just under a fifth (19%) are unsure. This is broadly in line with 2016 when 14% were unsure how it would impact pensions and 45% felt it was too early to tell.
For those respondents that believe Brexit will impact their pension schemes in some way, around a third (34%) believe it will increase employee engagement with retirement planning, while 31% believe it will motivate staff to decrease their pension contributions.
Very few respondents agree that Brexit will have no effect on staff (9%) and almost three-quarters (73%) agree that it is too early to know how exiting the EU will affect pensions.
Do respondents think Brexit will impact pensions?
Sample: All respondents (155)
It is too early to tell 39%
Yes 32%
No 11%
Do not know 19%
How respondents believe Brexit will impact pensions
Sample: All respondents that believe Brexit will impact pensions (46)
Brexit will increase employee engagement in retirement planning
Agree 34% Disagree 48% Not applicable 18%
Brexit will encourage staff to increase their pension scheme contributions
Agree 27% Disagree 62% Not applicable 11%
Brexit will lead to employees becoming disengaged from retirement planning
Agree 28% Disagree 41% Not applicable 30%
Brexit will motivate staff to decrease their pension scheme contributions
Agree 31% Disagree 51% Not applicable 18%
Brexit will motivate staff to opt out of their workplace pension scheme
Agree 27% Disagree 62% Not applicable 11%
Brexit will have no impact on staff
Agree 9% Disagree 74% Not applicable 17%
It is too early to tell how Brexit will impact pensions
Agree 73% Disagree 11% Not applicable 16%
GDPR legislation
Europe’s data protection will undergo its biggest change in 20 years when General Data Protection Regulation (GDPR) will overhaul how businesses process and handle data for all individuals within the EU, with the regulation due to take effect from 25 May 2018.
Just under one-third (32%) of respondents are aware of how the GDPR legislation will impact workplace pensions and are already taking action to ensure compliance. A further 31% say they are aware but are yet to take action. However, just under one-third (32%) are not aware of the impact of the legislation in this area at all.
Are respondents aware of how General Data Protection Regulation (GDPR) might impact work pensions?
Sample: All respondents (152)
They are aware and are already taking action 32%
They are not aware 32%
They are aware and plan to take action 31%
They are aware and do not plan to take any action 5%
The Lifetime Isa in the workplace
Three-quarters of respondents (75%) are not planning to introduce the Lifetime individual savings account (Lisa) as a workplace savings tool; this is a significant increase since 2016 when just a third of respondents (33%) said they would not introduce the Lisa.
The Lisa, which was launched in April 2017, is available to individuals aged 18-40 who will be able to save up to £4,000 a year into the savings vehicle until the age of 50. The government will contribute a 25% bonus when the savings are put towards a first home or are withdrawn as retirement income over the age of 60. When withdrawn for other purposes, the saver will forfeit the government bonus plus interest, and will also incur a charge.
Just 3% of respondents currently offer the Lisa to their employees, while 9% intend to so in future.
Will respondents organisations offer a workplace lifetime individual savings account (Lisa)?
Sample: All respondents (153)
They will not 75%
They will 9%
They have not decided yet 7%
They do not know 6%
They do 3%
