Tim Thomas: How do you get staff to understand how much to save for retirement?

With auto-enrolment now becoming a reality for many workers who do not have a pension, now is a good time to think about why workers should save towards their retirement.

Many employees already have the opportunity to join a workplace pension, but have chosen not to do so, and confidence in pensions still remains far below where it needs to be. Times may be tough, and the decision to maximise take-home income is the right one. The case then needs to be made, again, that pension saving should not be regarded as optional, or that it can be delayed until later in life.

We all face a future where we will live longer than the generation that preceded us, which in many ways is good news. We will also spend a greater number years in retirement than before. We will be healthier and will be able to work longer, but our years in retirement will need to be funded by a pension that will need to stretch further.

Traditional final salary schemes are scarce. If we are to have an adequate retirement income, then we must save for it now. This is the central message for all workers. Even after the much-heralded state pension reforms, in today’s terms, the state pension will be worth only £144 a week. There are few who would choose to live on this alone.

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There is, therefore, little choice but to save more, and probably work longer. The alternative is a retirement spent only barely above the poverty level. Workplace pensions make sense for employees; it’s comparable to a pay rise of, eventually, at least 3%. Would any workers say no to this? This then must be the message on staying in, rather than opting out, of a workplace pension.

Tim Thomas is head of employment policy at EEF