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More than a third of UK workers (34 per cent) are at risk of being unable to meet their basic needs retirementNew research from scottish widows indicates.
A “national retirement forecast” model, developed by scottish widows And Frontier Economics has estimated potential income for those aged 22 to 65, based on savings and spending.
Part-time workers are particularly vulnerable, many of whom earn less than the £10,000 threshold for automatic workplace enrolment. pensionDue to which they become unable to fulfill basic needs.
Scottish widows attributed this to the need to increase minimum contribution rates and widening pension knowledge gaps, hindering having an adequate retirement pot.
The study analyzed the views of 1,000 senior pension decision makers and 2,000 employees from different sectors.
The report found that more than a third (38 percent) of employees have little or no understanding of the pension benefits offered by their employer.
But more than two-fifths (45 percent) of companies surveyed said they provide regular information and support to help employees make informed pension decisions.
Some 41 per cent of companies surveyed said they take an active role in educating employees to engage with their pensions, with larger companies particularly likely to do so.
But even for employees at larger companies, understanding remains low, the report indicated, with 38 percent of those working for larger businesses having little or no understanding, rising to 41 percent at smaller companies and falling to 36 percent at those medium-sized businesses.
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More than one in 10 (11 percent) firms said their employees were not connected to their pensions, rising to 20 percent among smaller firms with 10 to 49 employees.
Graeme Boldt, managing director of workplace and intermediary wealth at Scottish Widows, said: “Workplace pensions may be the most powerful tool for people to shape their financial future, but low engagement is stopping people putting their best effort into long-term savings.”
He said pension apps, linking financial products into one place and using “gamified” tools could help people connect with their pensions.
He added: “There is a massive opportunity for pension providers, employers and those managing employee wellbeing to help them make the most of this workplace benefit.”
Modeling in the report took into account different sources of retirement income, including state pensions, private pensions, other long-term savings and inheritances.
It compares the retirement income of people who expect they can cope with living expenses for different retirement living standards defined by Pensions UK, and housing costs for those who expect to rent or continue paying a mortgage in retirement.
The employer survey was conducted online by Opinium Research among 1,000 senior decision makers who had at least joint responsibility over pension plans within their organization.
The organizations had at least 10 employees.
The employee survey was also conducted online by Opinium Research among 2,000 employees of businesses with 10 or more employees across the UK.
Both surveys were conducted between July and August.