Employers risk facing higher costs and workforce planning challenges if they fail to address retirement adequacy, Hymans Robertson has warned.

In its latest paper, Retirement adequacy: identifying future risks in your workforce, the consultancy argued that inadequate retirement outcomes should no longer be viewed solely as a pensions issue, given the potential impact on productivity, absenteeism, and workforce planning.

Hymans Robertson warned that changing retirement behaviors, later retirement, and falling healthy life expectancy could all create commercial challenges for employers, particularly where employees are unable to afford to retire when expected.

Using its Guided Outcomes modeling, the firm analysed expected retirement outcomes across workforces to assess where adequacy risks are concentrated.

One example, based on a large employer in the health sector, found that 15 per cent of employees were at very high risk of retirement inadequacy and were not expected to meet even the Pensions UK minimum retirement living standard.

Three-quarters of employees in the example workforce were projected to fall between the minimum and moderate retirement living standards, suggesting a significant proportion could still face inadequate outcomes.

Hymans Robertson said the potential cost of tackling those risks could also be significant.

Its modelling suggested that, for the example employer, changes including wider automatic enrolment eligibility, higher minimum employer contribution rates and the planned £2,000 cap on salary sacrifice savings from April 2029 could increase costs by around 25 percent.

However, the firm cautioned that policy-led increases in pension contributions would not necessarily produce the best outcomes across an entire workforce.

Hymans Robertson senior actuarial consultant, Mark Stansfield, said: “Retirement adequacy is increasingly becoming a business issue, not just a pensions issue.

“Many employers are already dealing with the effects of employee financial stress and changing working and retirement patterns, all of which can impact productivity, workforce planning, and long-term business performance.”

Stansfield noted that the risks were unlikely to be distributed evenly across an organisation, meaning employers needed workforce-specific analysis to identify where support was most needed.

He also warned employers against relying solely on future government reform to solve the problem.

“While potential future reforms such as changes to automatic enrolment and higher contribution requirements would increase employer costs, they may not solve the adequacy challenge for every workforce,” he added.

Hymans Robertson head of DC corporate consulting, Hannah English, urged employers to consider pension design as part of their broader workforce strategy.

“Employees need to balance long-term saving amongst day-to-day financial pressures," she said.

“However, for many, retirement saving still feels distant, and many may fully start to understand the scale of any retirement shortfall once dashboards make their pension position more visible.

“The question is not simply whether contributions should rise, but whether current support is helping different groups achieve better retirement outcomes in a sustainable and fair way."

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