Eighty per cent of employers feel as though their employees are not saving enough for their retirement, according to a study conducted by Wealth at Work.
The study, Focus on retirement income matters, also found that 61 per cent of employers believe that employees are “unaware of the risks they face when accessing their retirement savings”.
Although the research indicated that employers are aware that their employees haven’t got appropriate measures in place for their retirement, 71% of employers do not provide a full retirement income service for employees at-retirement.
Wealth at work director Jonathan Watts-Lay said: “Individuals tend to bury their head in the sand when it comes to saving for retirement but this needs to change if we are to avoid a retirement shortfall epidemic.”
Commenting on auto enrolment, Watts-Lay further stated: “Whilst auto-enrolment has come some way in helping employees save for retirement, it’s generally accepted that current contribution levels are not enough to create a sufficient retirement income.”
Fifty-one per cent of employers do not provide employees with financial education to help them save for retirement, and 55 per cent don’t offer, or plan to offer, an alternative saving vehicle for their employees.
Speaking on the matter, Pension Management Institute CEO Gareth Tancred stated: “One of the main challenges the industry faces is the risk of individuals not saving enough for their retirement, and as a result having insufficient income. Providing educational support to employees from early in their career is a crucial component in facing this challenge.”
Thirty-three per cent of employers have expressed that, if their employees do not choose a glide path, the default investment option will be targeted to an annuity. However, Watts-Lay believes that this is an “ill-considered strategy” due to a significant decline in annuity purchase since the pensions freedom took effect.