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16 Sep 2015

British employees aren´t putting enough away for retirement

The latest research from accountancy group Deloitte has revealed that British employees aren´t saving enough money to fund their retirement, the CIPD website reports.

According to the study, workers should be putting £10,000 a year into their pension savings if they wish to have a good standard of living in later life – but they are failing to save anywhere near this amount.

The report, entitled ‘Funding our future: Meeting the long-term savings challenge,´ highlights the growing discrepancy between people´s income and their expectations and requirements during retirement.

This savings gap is expected to reach £350 billion by 2050, which is nearly £32 billion more than the figure predicted by Deloitte in 2010.

If the UK population continues to expand, the shortfall could reach as much as £374 billion by 2050. Other contributing factors include public spending pressure, the closure of defined benefit contribution schemes and rising healthcare costs.

And because employers will struggle to raise their workplace pension contributions for the foreseeable future, the report notes that it will be up to HR departments to work alongside pension providers to raise awareness of the issue among staff.

Andrew Power, a Deloitte financial services consulting partner, urges companies to educate their employees about the need to engage with their pension plans.

“People in their twenties and thirties may have enough time to save [on average] less than £10,000 a year. For people who are older, you can help them understand what other assets they have, such as housing equity, and whether they are going to use those in retirement,” he advised.

The findings come amidst equally concerning results from a Resolution Foundation study, entitled, ‘A recovery for all?´, which claims that today´s workers are having 1% knocked off their annual pay rises as money is being put back into pension schemes of retired staff, because they and their employers failed to put enough money into final salary schemes.

Copyright M2 Bespoke 2015

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