A stark financial warning has been issued to thousands of workers across the UK who are planning their retirement, with a new study revealing a crisis in preparedness.
The Shocking Scale of the Problem
Research from Scottish Widows and Frontier Economics has uncovered that a staggering one in three people risk being unable to cover their basic living costs in retirement. Their 'national retirement forecast' model indicates that 34% of people aged 22 to 65 do not have sufficient retirement incomes when their current savings and spending habits are analysed.
The study, which gathered insights from 1,000 senior decision-makers and 2,000 employees, highlights a critical gap in the nation's financial safety net for later life.
Who is Most at Risk?
The forecast pinpointed that part-time workers are particularly vulnerable. Individuals earning less than £10,000 per year are not automatically enrolled into a workplace pension, leaving a significant portion of the workforce without a primary savings vehicle.
Compounding the issue is a widespread lack of understanding about pensions. The research found that 28% of employees have little to no understanding of the pension-related benefits their employer offers. This knowledge gap is most pronounced in small firms, where the figure rises to 41%.
Furthermore, 11% of firms reported that their employees are not engaged with their pensions. This disengagement is most acute in small businesses, where the number jumps to 20%.
A Call for Action and Engagement
Graeme Bold, Managing Director of Workplace and Intermediary Wealth at Scottish Widows, has urged both individuals and the industry to take action. He emphasised that a workplace pension can be the most powerful tool people have to shape their financial future, but low engagement is preventing many from building adequate long-term savings.
He pointed to potential solutions, suggesting that pension apps, consolidated financial product views, and 'gamified' tools could help bridge the engagement gap.
"There's a broader opportunity for pension providers, employers and those managing employee wellbeing to help them make the most of this workplace benefit," Bold stated, calling for a collaborative effort to tackle this pressing issue.
