Are Employees Ready for Retirement? New Study Says No
New research highlights many have a lack of confidence in their retirement prospects.
Recent research from Aviva's Working Lives Report 2023: Fit for Future, reveals a concerning trend: 22% of UK employees are not confident about planning for a financially secure retirement.
This statistic translates to approximately 6.3 million workers across the nation grappling with uncertainty about their financial future post-retirement.
Interestingly, the study found that confidence levels vary significantly by age.
Those nearing retirement are notably less optimistic about their financial prospects.
Specifically, 26% of employees aged 45 and above expressed a lack of confidence in retirement planning, compared to 20% of those aged 16 to 44.
The majority of respondents indicated that their pension would barely suffice to make ends meet in retirement, with 39% holding this view.
Only 20% believed their pension would be sufficient for a comfortable retirement, while a staggering 10%—equivalent to around 2.85 million employees—admitted to having no clue about their pension status.
Emma Douglas, Aviva's Director of Workplace Savings & Retirement, commented, "Pension freedom legislation has given people more flexibility and choice, but it has also created a wealth of options. It is desperately concerning that many pension savers are overwhelmed by the choices they face and are sleepwalking into retirement."
Douglas further emphasised the need for proper advice and guidance, stating, "Whether you want to consolidate your pensions into one pot; work out whether a drawdown or an annuity or a blended option is right for you; or how to make sure your pension savings last throughout retirement; getting the right advice, guidance, and support is essential."
The report also highlighted that the current cost-of-living crisis has exacerbated financial anxieties, affecting 72% of employees. Women were found to be more susceptible to this anxiety, at 78%, compared to 65% of men.
A significant 79% of employees expressed a desire for more support from their employers in planning for retirement.
Among these, 41% sought information on building a pension pot, and 45% wanted advice on making their pension last.
However, 20% of employers admitted to providing only the bare minimum of retirement planning information required by law.
Douglas concluded by urging a collaborative effort between the pensions industry and the government. "We are calling on the government to support pension savers by ensuring they get access to some form of financial advice at retirement. We also feel more can be done to support employers in promoting pension advice and guidance through workplaces."
The findings underscore the urgent need for better education, advice, and support in the realm of retirement planning, not just for employees but also for employers who play a crucial role in this ecosystem.
So, if you are approaching retirement and feel you need some retirement planning advice, contact us today.