Retirement funding attitudes need to change
Recent research from the CIPD and BlackRock finds that fewer than half of private sector employees regard pensions as the best way to save for retirement...
...which is at odds with employer attitudes that pension provision is a core part of the reward package [1]. Conducted between March and July 2009 and comprising 840 private sector employees it also included 55 telephone interviews among a cross-section of employers, including three charities in the ‘large SME’ category. These were MIND, Landmark Trust and The Prince’s Foundation.
Demographics point to a heavy burden of long-term care for the UK’s elderly and the government estimates that the number of over 65s will rise to 12.14m in 2031. So it is concerning that only 55 per cent of employees surveyed belonged to a company pension scheme and fewer than half of those regarded pensions as the main way to save for retirement. This raises issues not only for charities whose beneficiaries are the elderly poor, but for all charities dependent on income from individuals. The recent NCVO Giving 2009 report highlighted that 58 per cent (the largest proportion) of overall individual giving income (£9.9bn in 2008/09) came from over 65s.
The fall-out of the mis-selling scandal where employees switched from company schemes to risky private ones still lingers and employers need better tools from both providers and the government on how to explain the benefits of paying into a company pension scheme. Those not doing so are relying on inheritance, working beyond 65 (despite the recent Age UK case) and downsizing to fund their retirement. Worries of accusations of ‘giving financial advice’ contrary to FSA rules all too often put employers off providing basic information about the benefits of a scheme. The authors of the research recommend that:
- Employers have better tools to understand pensions and the role they play in supporting reward and people management strategies
- The pensions industry provides more comprehensive management information and educational support for employers to stimulate great take-up, as well as more innovative savings products that could potentially be wrapped into pensions.
- The government provides much better education for empoyees about the need to plan for retirement and greater clarity about the practicalities of auto-enrolment in 2010 [2].
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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