In light of mounting financial pressures faced by UK employees, recent research findings shed light on growing concerns among 83 percent of employees who fear they will have to delay retirement due to the cost of living crisis and inadequate savings.
The latest statistics from WEALTH at Work also reveal that a significant portion of the population, one in three individuals (33%), believe they may never be able to afford retirement due to rising expenses.
These concerns persist despite the success of auto-enrolment, a program launched over a decade ago.
The costs of living are still on the rise
Worryingly, the research indicates that the rising costs have compelled 13 percent of employees to either reduce or completely halt their pension contributions.
Moreover, nearly three in ten individuals (29%) admit they may consider discontinuing payments in the future, and an additional 30 percent are contemplating reducing future contributions. These trends raise particular concerns, especially when lower fixed-rate mortgage deals expire and if inflation fails to subside as anticipated.
Desperate times cause for desperate measures…
Furthermore, the study reveals that 10 percent of those eligible to access their pension savings have already resorted to withdrawing funds earlier than planned to supplement their income. Shockingly, 31 percent either intend to follow suit or are open to the idea in the future.
When it comes to seeking support and guidance for their pension plans, 56 percent of individuals admit to relying on unqualified sources such as their partner, family, friends, or colleagues (40%), or, in some cases, seeking no assistance at all (16%). Surprisingly few turn to their pension provider (15%), employer (13%), regulated financial advisers (8%), or specialist bodies like Pension Wise (4%) or Money Helper (3%).
Additionally, more than one in three employees (37%) express a lack of support in their workplace regarding financial understanding, despite separate research conducted by the Reward and Employee Benefits Association indicating that an increasing number of employers are now offering such support.
Jonathan Watts-Lay, WEALTH at work, comments on retirement:
“It’s alarming that these latest figures suggest that so many people are thinking about stopping or reducing their pension contributions to help alleviate current financial pressures. Whilst this is understandable, it really should be a last resort. Employees may not realise that whilst it may make relatively small savings each month, the impact on retirement savings to be used in later life will be dramatic due to lost employer contributions and tax relief.
“As the research shows, many are concerned if they really can afford to retire at all, with many believing that they will have to work longer to make up for a shortfall in savings. For those approaching retirement, it couldn’t be more important to make sure they have a plan in place.
“As highlighted in the research, it is very common for people to turn to their friends and family for guidance on their pensions, but they may not be the most qualified or indeed knowledgeable source. The good news is that many employers are now offering financial education in the workplace, as well as other support for employees.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.