Posted by

Lynn Graves, Head of Business Development - Scottish Widows

07 Oct 2015

As auto enrolment rolls out, employees are becoming increasingly reliant on their workplace pension in retirement, and for many, employer contributions are the main reason for saving according to our research.

In our recent Workplace Pensions Report, 60% of workers in larger organisations said they’ll rely on a workplace pension for a reasonable standard of living in retirement, and over half (54%) of those in a defined contribution scheme, said employer contributions are crucial to boosting pension savings.

As smaller organisations stage, they too may see a growing reliance for good schemes and educational support. Understanding employee attitudes and how they’re saving is the key to adapting to this growing dependence.

Scottish Widows recently launched an interactive digital tool, ‘Employees Like Mine’, to bring some of this information to employers’ fingertips, so they can better understand the retirement saving habits and attitudes of workers like their own.

What the insights are telling us

Employees from some industries and business sizes are faring better than others. Employees in large construction, medium IT & telecoms and small & micro financial services businesses save much more than the national average into their workplace pensions, but others are significantly under preparing.

We also found some employers are contributing generously into workers’ pensions, while others are paying considerably less than the national average, like small & micro employers in construction and large and medium transportation & distribution businesses who contribute the least into employee pensions.

What does this mean for employers?

Across all industries and business sizes, significant populations of employees think they are not saving enough. More than half of large retail businesses employees think they’re not saving adequately for retirement, but worryingly, nearly one in four said they’re also more likely to opt out of workplace pensions when their minimum contributions increase in 2018. This could lead to employees in some sectors working well beyond retirement age because they simply can’t afford to retire.

Already employees in medium sized Accountancy & Legal firms think they won’t be able to afford retirement until they’re 68. While this may not seem like a big issue, from an employer perspective it can impact on succession planning, productivity and morale.

What can employers do about it?

Employees want more information about retirement. 41% of large business employees would like employers provide help and support for retirement planning. By educating, many employees could actually be encouraged to save more.

Employers should consider ways to build employee knowledge through financial education. Research conducted by Workplace Savings & Benefits found that nearly one in three employers have a financial education programme in place, and a third of them are considering expanding it over the next 18 months.

Remember, knowledge is power. Understand how your employees approach their retirement plans, what their fears and challenges are and use this information to build the education they need. Helping employees recognise the importance of making plans early and saving, will help them retire when they want, rather than when they can afford to.

All views expressed in guest blogs are that of the authors, and not of the British Chambers of Commerce.