Four in ten workers don’t believe they can afford to retire on their current pension

Despite strong employer commitment to workplace pensions, research from Penfold reveals that millions of UK workers remain uncertain about their retirement – by Chris Eastwood

Almost two-thirds (65%) of employers now view pensions as a core employee benefit or competitive advantage, rather than simply a compliance requirement. Meanwhile, 86% say they would continue offering workplace pensions even if they were no longer legally required.

However, despite this growing commitment, many employees remain unconvinced that their pension will provide the retirement they want.

More than two in five workers (43%) are not confident their current pension will fund a comfortable retirement, while 26% say thinking about their pension leaves them feeling anxious or confused.

The findings come from Penfold’s ‘The UK Pension Gap’ report, based on surveys of 2,000 UK employees and 500 small and medium-sized businesses across the UK. Analysis suggests that while automatic enrolment has successfully encouraged millions of people to save, many employees still struggle to understand what those savings mean for their future.

“It’s good to see that employer intent is strong in delivering quality, impactful workplace pensions schemes. But the way pensions are delivered and communicated is currently not resonating with employees,”

“The encouraging news is that employers are taking pensions seriously,” says Chris Eastwood, CEO and co-founder at Penfold. “They recognise that delivering quality, impactful pensions is an important part of attracting and retaining staff.”

“The worrying part is that many employees still don’t believe those pensions will give them the retirement they’re hoping for. Our data points to a fundamental issue; despite the now-widespread provision of pensions, many workers still lack clarity about what their savings mean for their future.”

Additional findings include:

• 13% of employees have reduced, paused or stopped their pension contributions during the past 12 months, suggesting growing disengagement with long-term saving.
• Less than 1 in 5 (17%) of employees describe themselves as very confident in their retirement. For many employees, confidence appears to come more from optimism than from a clear understanding of their retirement position.
• While employers gave their pension providers 84% to 88% satisfaction across all areas tested (payroll integration, account management, responsiveness to queries, compliance support and technical expertise), half of employers believe their pension provider actually makes pensions more complicated than necessary.

Eastwood continues, “For most people, a pension is one of the biggest financial assets they’ll ever own. Yet too many people don’t know what it’s worth, what income it could provide or whether they’re on track.

“Today’s workforce expects financial tools that are transparent and easier to engage with. When pensions are difficult to understand or disconnected from day-to-day financial decisions, the everyday worker is far less likely to feel confident about their future.”

“Confidence from employees increases significantly when people can clearly see how today’s contributions affect tomorrow’s retirement. They’re more likely to stay engaged, and thus it enables more responsive changes to behaviour, creating meaningful steps to restore control and confidence in their future.”

Eastwood concludes, “Good employer intentions alone aren’t always enough. Whilst it’s great to see that the motivation is there, addressing the information communication gap is the clear next step in making those pensions feel meaningful. When people understand where they’re heading, they’re far more likely to feel confident about getting there.”

To read the report in full, click here: https://getpenfold.com/pension-gap