Britain could be sleepwalking into a ‘pensions time bomb’ as huge numbers of people aged 55+ lack adequate financial provision for their retirement, according to new research from UK professional services consultancy Barnett Waddingham.
The research, based on data of 2,000 UK adults, reveals that over a quarter of people aged 55+ (28%) currently have no pension provisions from a workplace or private pension scheme, and will only receive a state pension. This falls to one in five (20%) for those aged 35-54, and to one in ten (10%) of 18-34 year-olds. The data also finds significant gender imbalances, with almost four in ten (38%) women over the age of 55 solely relying on the state pension – this compares to 18% of men in the same age group.
Concerningly, according to previous research conducted by Barnett Waddingham in April 2021, these figures have remained relatively unchanged for over 55s in recent years – staying at 28% for this age group, 21% for 35-54s and 19% of 18-34s – suggesting little has been done to improve this situation.
For individuals, the findings raise serious concerns about those currently approaching retirement age with inadequate pension savings, which could see many working for longer or even returning to work to contribute to a pension. This is particularly more concerning as analysis by Age UK of ONS data finds that 1.5 million households in the UK of pre-state pension age have savings of less than £5,000, and 120,000 have no savings at all.
For employers, the research similarly raises operational concerns about supporting an increasingly ageing workforce – particularly when it comes to providing coherent benefits packages for employees. For example, with older workers more likely to suffer from acute or chronic medical conditions, businesses will need to ensure they have comprehensive insurance coverage to ensure their workforce is providing effective support, and taking into account the additional business cost.
Paul Leandro, Partner at Barnett Waddingham, says: “Over a quarter of people over the age of 55 could be retiring without a sufficient pension, which is hugely worrying. If we also take into account life expectancy figures and future increases to the state pension age, people are working and living for longer, but could still struggle to afford a comfortable retirement. It’s difficult to believe that people work for over 45 years are then left with very little to enjoy retirement.
“Businesses should be paying close attention to these findings, and what it means for them. They need to be more cognisant of supporting older workers. It will be imperative that employers factor this into their future operations, but also understand how they can minimise situations like this in future – whether by reviewing their auto-enrolment processes, and the level of pension offering to employees, addressing any inherent gender pension gaps and understanding and tackling the reasons people may opt-out of pensions.”
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