Fewer than half of private sector employees regard pensions as the best way to save for retirement, despite employers’ attitudes that pension provision is a core part of their reward package.
According to research carried out by the Chartered Institute of Personnel and Development (CIPD) and BlackRock, only 28% of private sector employees know how much they should be saving for a comfortable retirement and more than half (56%) are worried they will not have enough.
Despite this, fewer than half (48%) have reviewed their contribution levels in the last two years, and 47% expect to have to work longer than anticipated five years ago.
Nearly a third (31%) cited financial constraints as a reason for not saving into a pension. Many employees are also looking into other sources of funding their retirement including inheritance (19%), downsizing or selling property (21%), support from family and friends (6%), and expecting to get another job after retiring to supplement their income (27%).
Charles Cotton, chief reward adviser at the CIPD, said: “”This research clearly shows that employees and employers alike are sleepwalking into a potential retirement disaster. Many employees are planning to rely on downsizing their home, family hand outs or the government to support them in retirement, while many employers
will face the prospect of trying to motivate an older workforce who are simply soldiering along because they cannot afford to retire.
“While employers are no longer responsible for the retirement planning of their employees, it makes sense for them to educate their staff on the importance of saving into a pension scheme. However, employers can’t do this on their own. They need government support to help empower employees to make informed choices on the options available.”