A huge number of over-40 workers in the UK fear they’ll be unable to retire from the workforce until into their 70s – because they won’t have the pension in place to do so.
New research data shows more than a third of over-40s think they’ll still be working far past the state pension age, currently 66, while over a quarter are concerned they don’t know enough about their pension plans because their employers do not provide the necessary information.
In the UK, the deadline is fast approaching for anybody to fill in gaps in their National Insurance record from the past two decades if they want to top up their state pension, but beyond that, even getting a full payout each year from the state pension is unlikely to fund a comfortable retirement for many people.
At the current rate, a full state pension will yield around £11,500 a year per person, but estimations of retirement costs are far higher. The Pensions and Lifetime Savings Association suggests the average cost of a moderate retirement can be more than £30,000 annually – and that figure rises if you want more holidays, a better standard of living or have any other additional costs.
Therefore, paying into pension schemes or having other long-term investments is crucial to helping the UK workforce be adequately prepared for later life – which many don’t feel they are, according to the results of the My Pension Expert survey.
Asking 2,000 UK adults in the workforce about their retirement plans and how they felt about the future, more than a third (35 per cent) of over 40s said they expect to still be working once past age 70.
Around 52 per cent of the eventual respondents with a workplace pension fell into this age group category.
And fewer than two-fifths (38 per cent) of those over 40s said they were confident their pensions would allow them to have a comfortable retirement, while almost four in ten (39 per cent) acknowledged that retirement planning made them feel anxious.
Notably, a full quarter of respondents said their employer does not provide adequate information about their workplace pension – including basics like who the provider is, or levels of performance.
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My Pension Expert policy director Lily Megson said employees are right to demand more support from their places of work when it comes to the question of what is next.
“It’s clear that UK employees, particularly those aged between 40 and 60, are crying out for more support when it comes to their pensions and retirement planning,” she said. “And they are right to. Pensions are one of the biggest financial commitments a person will make, yet many feel they are left to figure it out alone.
“Naturally, people are looking to their employers for support. The workplace plays a huge role in our lives, so it makes sense that it should also be a source of financial confidence. But our research shows that, for many, this simply isn’t happening. Too many employees are enrolled into workplace pensions and then hear nothing more, leaving them unaware of how their hard-earned savings are performing or what their options are for the future.”
However, Ms Megson also pointed out that workers must take the initiative themselves to find out more about pensions, with their own futures at stake.
She added: “That said, the onus shouldn’t lie solely on employers. The government has dedicated plenty of time to pension reforms aimed at boosting the economy and helping businesses.
“But let’s not forget whose money is at the centre of all this – employees’ pension funds. Their financial security in retirement must be the priority. Greater transparency, engagement, and access to financial education are all absolutely vital in ensuring workplace pensions are delivering what employees need.”
Asked what policies would be most beneficial for employers to offer to support retirement planning, 30 per cent chose “providing access to independent financial advice” as a key benefit, with only two other selections ranking higher.
Increased employer contributions into workplace pensions was favoured by 45 per cent of respondents, with an option of phased retirement appealing to 36 per cent.
