According to the recent Scottish Widows 2024 retirement report, the pensions crisis is deepening, with the number of individuals not on track for even a basic retirement lifestyle rising from 35 to 38 per cent over the past year.
This growing problem highlights the important role businesses play in supporting their employees’ financial futures.
The report, which gathered data from over 5,000 participants, shows that financial difficulties are causing many to postpone retirement.
More than half of the respondents expect to work seven years longer than they would like, while 27 per cent worry they might never retire.
54 per cent plan to depend on the state pension for their retirement income.
How business owners can make a difference
Here are some practical actions business owners can take to help their employees prepare for retirement:
- Urge your company to match or exceed the advised 12 per cent contribution rate, aiding employees in building a better retirement fund.
- Provide resources and training to educate employees about the importance of retirement savings and financial management.
- Capitalise on the upcoming adjustment that lowers the auto-enrolment age from 22 to 18, helping younger workers begin saving earlier and grow a more substantial pension pot throughout their careers.
- Design benefits packages that allow employees to modify their pension contributions based on their circumstances and financial objectives.
The Pensions and Lifetime Savings Association (PLSA) defines a minimum retirement lifestyle as one that covers essential needs and allows for some leisure activities.
This costs £14,400 annually for a single retiree and £22,400 for a retired couple, assuming they receive the full state pension.
Currently, the state pension stands at £11,500 per year for those qualifying at age 66, with the qualifying age set to rise to 67 by 2028.
The growing number of people unprepared for retirement is an urgent issue that requires immediate attention.
Business owners can play a key role in mitigating this crisis and ensuring their employees’ financial security.
Our team can give expert advice on all matters relating to workplace pensions. Contact us today.
