The vast majority (91%) of respondents to the Money Advice Service’s (MAS) The financial capability of the UK report, published in August, believe it is best for individuals to start saving into a pension in their 20s. However, only 28% of respondents currently do so.
Close Brothers’ inaugural Trends in wealth report: road to retirement, also published in August, found that almost half (48%) of respondents are worried about not having sufficient post-retirement income to meet their needs.
But despite the awareness highlighted in the MAS research and the concern revealed by the Close Brothers survey, a third report, published by Jelf Employee Benefits at the end of July, found that 72% of employer respondents do not see the need to invest in retirement education for employees.
The Jelf research, which questioned employers in the context of the removal of the default retirement age (DRA), asked whether its removal has led to increased demand for pre-retirement workshops and education for staff.
Lee Coles, head of Jelf Money after Work, said: “In the past, sending someone on a retirement course was probably a nice paternalistic thing for an employer to do. It isn’t just a paternalistic question any more. There are risk management and commercial questions now.”
Jeannette Makings, director of financial education services at Close Brothers, has seen the employers she works with take responsibility for educating employees about their options as they approach retirement.
“Some of them go way beyond what is required legally and by best practice by having really engaging communications strategies, by bringing in specialist financial education providers and by bringing in access to financial advice for their staff,” she said.
Besides workshops related to financial awareness, employers can also provide staff with workshops that focus on lifestyle, relationships, health, time management and employment. Coles added: “An employer could choose to fund advice. I would also point to help with finding at-retirement solutions in terms of annuity broking, as well.”
The Employee Benefits/Capita Pensions research 2013, published at the end of July, found that only 2% of employer respondents with more than 5,000 staff arrange for external advisers to undertake one-to-one sessions about pensions with their employees, while 78% rely on their pension provider to communicate with staff.
While auto-enrolment gives employers an opportunity to communicate to staff about their retirement options, it is also a chance to focus on the wider concept of complete financial wellbeing.
Jackie Spencer, proposition manager for pensions and retirement strategy at the MAS, said: “We have done a lot of consumer research to look at the messages that would work and the layering of information. It is about being clear and transparent about the importance of retirement savings, but also that it is within employees’ control to do something about it.”
Makings added: “People don’t seem to have an issue conceptually with wanting to save for a holiday or wanting to save for a deposit on a mortgage. In thinking about saving for retirement and to improve financial wellbeing, those are the things that employers need to focus on, bringing those sort of concepts to bear in this space.”
- 91% of respondents to the Money Advice Service’s The financial capability of the UK report believe it is best for individuals to start saving into a pension in their 20s.
- 48% of respondents to Close Brothers’ inaugural Trends in wealth report: road to retirement are worried about having sufficient post-retirement income to meet their needs.
- 72% of respondents to a Jelf Employee Benefits’ report do not see the need to invest in retirement education for employees.