Employers are still not getting retirement support right
We asked 1,000 employed people over 55 a series of questions about their retirement planning. Some key findings from the research showed that in general people are still not planning enough for retirement, with a huge 43% not having given any thought to their retirement finances at all.
What stops people planning?
In our experience, having the time, the inclination or not knowing where to start are the main barriers to planning for the future. If the planning commences too late or is ineffective, this then has an impact not just on the individual but also on their employer; you would have to question how engaged an employee would be if they really wanted to retire but didn’t feel they could afford to or were well-enough prepared. However, if the employer doesn’t pro-actively offer support, our research suggests their employee is unlikely to ask for it or pay for it themselves.
A comfortable environment for discussion
It is important that employers question whether they have built a comfortable environment for their employees to ask questions about retirement. Only 43% of people said they felt comfortable discussing retirement with their employer and even if they do, as we mentioned before, only 24% said that they thought their employer offers the support they need to help them plan for retirement anyway.
With the abolition of the Default Retirement Age there is no longer an automatic exit for older employees. Our research found that nearly 1 in 5 people intend to continue working until they are no longer able to. This poses a problem for employers because it could lead to saturation of their workforce where younger employees are unable to progress their careers unless older, potentially more senior employees leave the business. If there is an over-reliance on performance management as a tool to exit unproductive employees (of any age), this process is naturally more open to age discrimination claims from older employees.
What’s the solution?
Financial advice is one option, but now that this is a service which has to be paid for, the cost will inevitably present a barrier to some and it’s unlikely that employers will pay for personalised advice for every employee.
Other professional assistance to give employees the appropriate nudge to commence planning typically takes the form of group workshops, individual clinics and online training, focussed not just on financial matters but also the inevitably changes to lifestyle that retirement brings.
To support planning, our research highlighted a desire from employees for one-to-one conversations first, with online workshops second on the list and group workshops third. This response was slightly surprising to us, on the basis LaterLife has been running retirement planning workshops for over 10 years and 99.99% of over 10,000 attendees would recommend our workshops to other people approaching retirement.
Whilst we do offer an online workshop and individual clinics, inevitably employers are happy to sponsor group workshops on the basis many employees can benefit. A full day workshop also gives people the time to really think about all the aspects of their retirement, a structure from which to plan and a pointer to useful resources and what to do next. The other support options can then come into play later on when individuals need to revisit their plans and adapt them over time (an online course for example) or individual conversations for more complex issues or for those who want some extra guidance.
To conclude, employees are still not planning and it is essential that employers consider what support they do offer to help and how well that is communicated. This isn’t just the case for older employees and the wellbeing of their entire workforce should, of course, be considered. However, there may be an argument that encouraging better dialogue with those in the latter stages of their career is seen as a priority.
For more information visit our Workplace Retirement Support section.