Employers: don’t neglect 45-54 year olds when it comes to pensions

Often the most targeted group due to the necessity that they begin planning for their retirement with haste, individuals aged 55-64 have been in the pensions education spotlight in recent months thanks to the pension freedoms announced last April and the forthcoming new state pension.

With more flexibility ahead of retirement to access their pension than ever before, both the government and employers have been encouraging staff nearing state pension age to fully understand the options available to them.

The focus on supporting this age group appears to be working, with research conducted by Wealth Wizards in March 2016 finding that individuals aged 55-64 are the most confident in their plans and ability to achieve a comfortable retirement, when compared to other demographics.

34% of 55-64 year-olds believe their state pension will be enough to sustain them in later life, while 44% have faith that the pension set up by their employer will support them in retirement. 24% are hopeful that the personal investments they’ve made in ISAs, dividends and property will enable them to achieve their desired retirement income.

And yet while much has been involved in engaging staff aged 55-64 with financial education, Wealth Wizards’ research has found that pre-retirees, those aged 45-54, are profoundly lacking in the same confidence when it comes to achieving their retirement savings goals.

For the older half of Generation X, there’s a lot less clarity around retirement options and longer-term planning with 45-54 years-olds believing they are the most likely group to need to work past retirement age. Worryingly only 22% believe their state pension will be enough, and just 32% feel that they can rely on their workplace pension.

And it’s no surprise when of the 45-54 year-olds surveyed, a staggering 41% have one or more children aged 18 or under, with the same portion stating they have a mortgage or home loan that they are still repaying.

At a life stage when disposable income is at an all-time low 45-54 years-olds are struggling to see how they can adequately plan. Results from Aviva’s 2015 Real Retirement Report show that private savings and investments will only deliver 29% of expected income, and even with the State Pension, savers will still have an annual gap of around £2,299.

With the same report finding that only 43% of working over-45s feel financially “fit to retire”, it’s estimated that an annual income of £12,590 will be required from their savings and investments when they cease working.

What can employers do to help?

In order to help employees prioritise retirement planning and saving, employers need to help staff facilitate the groundwork for their retirement goals. Through independent investment advice and promoting the benefits of a workplace pension, businesses can help their staff feel fully equipped to take control.

By encouraging staff to save a little more, and often, employers can help to effect real change in both the outlook 45-54 years-olds have on their future and the reality of their retirement income.

With approximately nine million Brits aged 45-54 currently in the workforce, it’s now more important than ever to ensure they receive the right information and encouragement to make the right provisions for retirement.

For more about how we can help your employees with cost-effective and regulated advice, find out more about Pension Wizard

2016-11-15T14:27:12+00:00 Blog|