Employees could face a significant retirement funding gap as many delay prioritising their pension until their 40s and 50s, highlighting the need for better engagement strategies, according to research from Fidelity International.

The study, based on the views of more than 3,000 of Fidelity’s workplace pension members, revealed the financial “balancing act” employees face when trying to manage multiple goals, with retirement saving often losing out to more immediate pressures such as property and everyday expenses.

For younger workers aged 18-34, just 15 per cent prioritise retirement saving, compared with 35 per cent focused on saving for a property and 29 per cent on day-to-day costs.

Even by mid-career (35-44), retirement savings (28 per cent) still lag behind everyday expenses (40 per cent).

It is only between the ages of 45 and 54 that retirement planning (39 per cent) overtakes other priorities.

Fidelity International head of workplace investing distribution, Daniel Smith, warned that this late shift risks leaving many with inadequate savings.

“Waiting until your 40s or 50s before prioritising your retirement savings can result in a significant gap between what’s saved and what’s needed for a comfortable retirement,” he
said.

The research also found that employees are calling for clearer guidance, with two-fifths (40 per cent) wanting to know how much they need to save to support a comfortable standard of living in retirement, rising to half of those under 55.

Meanwhile, among over-55s, one in five expect to work longer than planned, with 62 per cent of this group citing a savings shortfall or changed financial circumstances as the main reason.

Smith stressed the importance of accessible support and tools to help savers navigate competing priorities across different life stages.

“With the right support, these goals don’t have to compete - they can coexist,” he claimed.

The findings follow a series of recent warnings over retirement adequacy.

Earlier this year, the Pensions Policy Institute (PPI) highlighted the growing savings gap faced by younger workers, and LCP urged schemes to go further in their member engagement strategies.

As a result, policymakers have been urged to take action to "safeguard" the future of retirement in Britain, with the industry backing plans to move forward with a system of targeted financial support and calling for a consultation on the most appropriate state pension uprating.

Fidelity International also emphasised the role employers can play in improving financial wellness by partnering with providers to implement education and guidance programmes that help staff maximise workplace benefits and pension contributions.

Echoing calls for more support, Smith argued that financial wellness was about understanding an individual’s total financial situation.

“Employers are often the gateway through which employees access educational resources, and awareness of these programmes is vital if people are to make the best decisions for their financial futures,” he added.

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