“We have witnessed a dramatic global shift… towards private retirement saving plans, in which benefits depend on the value of accumulated assets. This has transferred significant risks from the state and employers to individuals … accompanied by a trend towards lower overall contribution rates.”
OECD/Cass report quoted September 2016 in PARC Report: “The Retirement Dilemma”
Populations are aging, social care has become a critical societal issue, government deficits have expanded in line with increased demand for services, and the global experience of low returns and high volatility has reduced public confidence in retirement savings. The twin challenges of investment risk and longevity risk, that most companies have transferred to their employees, now raise very significant concerns about the adequacy and security of future retirement income.
According to the Great British Retirement Survey published in October 2021, more than half of 24- to 29-year-olds think the state pension won’t exist by the time they retire. How a company chooses to support its employees to understand and confront these issues will become a source of strategic advantage in an increasingly competitive labour market.
The flipside of “pensions freedoms” has been the bewildering decision-making process. The Resolution Foundation has argued that financial education is a pre-requisite to taking financial advice, to avoid the risk of “making financial choices that inflict further punishment”. And yet fewer than 10% of people in the UK are taking any form of financial advice that might enable them to understand the risks, the range of providers, their services, or their cost structures. While most employers agree that financial education is important, only 30% say they are doing anything about it. Furthermore, only 18% plan to increase their spending on it.
Our 2016 report was subtitled “Sleepwalking into a Crisis?”. Five years on, it looks like we are still on course for the potential crisis in “later life income” that awaits our employees.
This session in 2022 focused on the potential role of the employer in ensuring that their employees are better equipped to plan their own finances for later life. Together with the accompanying report, the session provided insights to help companies develop support strategies and mitigate the looming crisis.
Watch meeting recordings from the three sessions delivered by the event speakers here. Alternatively, catch up with the Post Meeting Notes for a comprehensive summary of the meeting.
Login to access all PARC content or enter your details to access this exclusive resource