Nearly two thirds of British employees (62%) have little to no idea of the government’s new pension freedom laws will affect them, according to research from professional services company Towers Watson.
The survey of 5,000 UK workers reveals that, among those who understand the reforms, there is a deep concern that many people will not be prepared for retirement. 56 percent of respondents admitted rarely discussing their retirement plan, and just 34 percent of respondents considered putting money aside as savings to be a financial priority.
Fiona Matthews, Managing Director of LifeSight, Towers Watson’s master trust, said:
“This information deficit has the potential to store up major problems in the future, especially as our ageing population means there will be 15.5 million pensioners in the UK by 2030.
“It is not surprising that this lack of interest in discussing retirement planning has caused many to worry they haven’t saved enough for retirement. This is supported by the research which shows that employees are saving, on average, £1,640 less of their salary annually than they think they should. (9.5% of salary vs. 14.3%) – this significant saving shortfall could have major ramifications for people’s quality of life in retirement.”
47 percent of those surveyed believe that pensioners will be vulnerable in later life and 42 percent think the reforms will promote irresponsible spending. The increase in flexibility was seen to be the greatest benefit of the government’s pension reforms.
The reforms mean that people over the age of 55 will have full access to their defined contributions pension scheme to withdraw as they choose.
Matthews adds:
“Despite limited knowledge about the pension changes, people are engaged in their financial future to want to find out more. We strongly encourage people to reach out to their employers or pension providers to ask questions, find out about their options and get guidance on what they need to do at this stage in their life to make sure they are well prepared for retirement.”
Steff joined the HRreview editorial team in November 2014. A former event coordinator and manager, Steff has spent several years working in online journalism. She is a graduate of Middlessex University with a BA in Television Production and will complete a Master's degree in Journalism from the University of Westminster in the summer of 2015.