More than four in every 10 workers believe they should contribute more than 10 per cent of their salary to retirement savings, despite the average contribution standing at just 5 per cent, according to CIPD research.
A further 22 per cent don’t know how much they should be contributing at all, the survey found.
The report, published by the professional body for HR and people development, was based on a survey of 2,255 working adults and examines the difference between what employees are currently paying and what they would like to pay and how this impacts on their choices to work post the average age of retirement. It also highlights the need for both government and employers to raise awareness among workers on the value of workplace pension schemes and importance of retirement planning.
Charles Cotton, reward adviser for the CIPD, said, “The looming pensions crisis cannot be ignored any longer. Auto-enrolment has been successful in getting six in every 10 eligible workers saving through a workplace scheme, but their ability to contribute adequately is being severely hampered by poor wage growth.”
The survey also found 61 per cent of people are considering working beyond the state pension age in some capacity. Almost half expect to do so in a permanent job, of which nearly 31 per cent would like to work in a part time role, and the remaining 16 per cent in a full-time role.
Pointing to the age at which employees expect to retire and the amount that they want to save for a pension, the survey found the size of the business has a considerable impact too. Those in smaller businesses and who aren’t saving through a workplace pension scheme expect to retire at 67, with 7 per cent anticipating they will have to work past the age of 70. The research also points out that almost 76 per cent of employees working for a micro employer and 60 per cent of those working for small businesses are not yet enrolled in a workplace pension scheme.
“While the extended time frames for small businesses to adopt auto-enrolment into workplace pension schemes may have been good news for them, it seems many of their employees have been missing out on the security a workplace scheme provides,” Mr. Cotton said, citing that as the main reason why employees wanted to continue working beyond the average age of 66 years.
“Smaller employers need to review how quickly they can reasonably introduce a pension scheme as well as how they manage, develop and reward their staff. This can include such options as job design, flexible working, performance management and development,” Mr. Cotton added.
The survey also looks at responses on the upcoming pensions freedom decision. While awareness is strong, only about 27 per cent plan to take advantage of the new freedoms and 29 per cent plan to save more because of changes but can’t afford at present. 13 per cent plan to increase their pension savings, 6 per cent are considering early retirement while 8 per cent are delaying it.
In other findings, auto-enrolment has been successful with an increase in the proportion of workers saving into a workplace scheme up from 61 per cent to 64 per cent between December 2013 and December 2014. In December 2010, the figure stood at 45 per cent.
