Majority of companies unprepared for ageing workforce

The majority (62 per cent) of UK business have not reviewed their pensions strategy to prepare for the challenge of an ageing workforce, Capita has revealed.

This is despite 89 per cent of HR leaders saying that ageing workers and pensions shortfalls are creating “massive challenges”, with a further 52 per cent citing employees looking to work beyond retirement age as the most significant factor impacting their pension provision over the next two years.

Capita’s research has suggested that more companies should review their pensions strategy, as 60 per cent of UK workers were found to not having any retirement goals in terms of savings or age.

Just 15 per cent of responding UK employees were confident that they will have enough money saved to be able to retire.

In light of the changing workforce, 51 per cent of companies said that they are planning to review their pensions strategy within the next 12 months, although 11 per cent said that they have no plans to do so.

The research showed that most firms would rather completely reset their pensions strategy instead of tweaking their current system and the majority saw the benefits of de-coupling the state pension age from the retirement age.

Commenting on the findings, Capita Employee Solutions managing director, Gareth Pickles, said: “There is clearly a real appetite amongst business stakeholders to develop new approaches to pensions, with fresh thinking and innovative solutions.

“As an industry, we have to re-define what retirement means and re-structure compensation and benefits to put more focus on long-term savings, to meet the needs of the future economy and our current and future workforce.”

The vast majority of HR leaders (90 per cent) expect to be put under greater pressure to increase pensions contributions and 92 per cent believe that they need to be more transparent with employees about the current realities of retirement.

Only a quarter (26 per cent) of UK workers claim to know exactly or to be able to give a near estimate as to how much money they have saved in their company pension, whilst a third (34 per cent) admit to having no idea about their level of savings.

The biggest concern for employees is that they will not have enough money saved up to retire comfortably, with 83 per cent of workers citing this as a worry.

Close behind is a lack of understanding about pensions and investments to make considered decisions (77 per cent) and not contributing enough into pensions savings on an ongoing basis (77 per cent).

Other employee anxieties around pensions savings include poor performance of existing pensions investments (74 per cent), a lack of trust in financial markets and advisers (71 per cent), and uncertainty about how to find and track down previous pension schemes (63 per cent).

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