Almost three quarters of employers (74 per cent) are concerned their workforce is not saving enough for retirement, according to new research highlighting growing anxiety about the impact of cost‑of‑living pressures on long‑term pension saving, particularly among younger and lower‑paid workers.

The research by The People’s Pension – which surveyed 500 small or medium-sized enterprise (SME) decision-makers – showed that 77 per cent of employers were particularly concerned that younger workers and low earners were not saving enough for their later life.

In fact, one third (32 per cent) of SMEs said that younger employees were most likely to opt-out of workplace pensions, with the most common reason being affordability (38 per cent), although understanding (24 per cent) and perceived value (18 per cent) were also cited as reasons for younger workers to leave.

The findings indicated that employers were increasingly focused on practical measures to improve pension engagement and limit opt‑outs, amid the continued pressure on household finances.

For example, nearly half of employers (45 per cent) said clearer communication and education around pensions would help boost engagement, while 40 per cent pointed to the need for additional support with financial wellbeing and retirement planning.

Meanwhile, more than four in five employers (82 per cent) said they felt a responsibility for employees’ financial wellbeing, despite three quarters (75 per cent) reporting that rising costs limited how much they could increase pay.

Commenting on the findings, People’s Partnership distribution director, Stuart Reid, said: “Employers are clearly focused on how they can support their workforce, particularly younger and lower-paid workers who are more exposed to financial pressure.

"As many households face renewed pressure on day-to-day finances, helping people stay engaged with long-term saving has become even more important.

“What this research highlights is the importance of communication and support in helping employees engage with their pension. Where understanding is lower, simple and accessible guidance can play an important role in helping people make informed decisions about their long-term finances."

He added that even in a challenging environment, workplace pensions remained a key part of long-term financial planning.

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