Pension crisis looms, so how can business owners help their employees?
The recent Scottish Widows 2024 retirement report highlights a growing pensions crisis, with the number of people not on track for even a minimal retirement lifestyle rising from 35 to 38 per cent over the past year.
The alarming rise in the number of people not saving enough for retirement has implications for individuals and businesses alike.
For businesses, it is a chance to ensure their payroll management practices are efficient enough to secure the financial well-being of their employees.
The retirement report, based on interviews with over 5,000 people, reveals that many are delaying retirement due to financial concerns.
Over half of those surveyed expect to work seven years longer than they would like, and 27 per cent believe they will never retire.
54 per cent expect the state pension to form a significant portion of their retirement income.
Steps business owners can take
As a business owner, you have an important role in helping your employees prepare for retirement. Here are some steps you can take:
- Provide resources and training to help employees understand the importance of retirement savings and how to manage their finances effectively.
- Take advantage of the future amendment of the auto-enrolment age from 22 to 18. This will help younger workers start saving earlier and build a more substantial pension pot over their careers.
- Offer flexible benefits packages that allow employees to adjust their pension contributions according to their personal circumstances and financial goals.
The Pensions and Lifetime Savings Association (PLSA) defines a minimum retirement lifestyle as one that covers essential needs and allows for some leisure activities.
For a single retiree, this costs £14,400 annually, while a retired couple requires £22,400. These figures assume retirees receive the full state pension, currently £11,500 annually for those qualifying at age 66, rising to 67 by 2028.
The rising number of people unprepared for retirement is a pressing issue that requires immediate attention.
As business owners, you can help reduce the looming retirement crisis and ensure a more secure financial future for your workforce.
If you would like any assistance with your workplace pensions, our team of expert accountants are here to help. Contact us today.
