GLOBAL – A recent study by insurer Aegon has found a large gap in employers and employees’ expectations about retirement.
The study, entitled ‘The Changing Face of Retirement: The Workplace Perspective’, is based on a survey of 9,000 people in France, Germany, Hungary, the Netherlands, Poland, Spain, Sweden, the UK and the US.
In addition, 12 international employers in the first four of these countries were also interviewed.
The survey, carried out in collaboration with the Transamerica Center for Retirement Studies, found that 58% of employees expect to work beyond retirement.
However, as phased retirement increasingly becomes the norm in much of Western Europe and the US, and as longevity and investment risk shifts increasingly towards employees, employers are unprepared for this trend, Aegon found.
The survey highlights the growing need for employers to provide financial advice, re-skilling and opportunities to move to part-time work, or even to carve out new careers.
The survey found that an entire generation of employees would retire with inadequate savings over the next few years.
The first generation of employees with defined contribution pension plans will stop work in the next few years.
Yet only 15% of employees believe they are on course to achieve the income they want in retirement.
Aegon said there were now considerable challenges for employers and employees in terms of retirement – an ageing workforce, volatile financial markets, pressures on business and household budgets and, still too often, a lack of employee interest.
However, the survey highlights a range of actions available to individuals, employers and governments to prepare for a world in which people would live longer than at any time in history.
It says the number of employees participating in company pension plans should be increased by automatic-enrolment, with “opt-out” rather than “opt-in” provisions.
Scheme members should also be given the option of increasing their pension contribution rates at fixed intervals, for example, every year.
Employers should offer their employees a greater range of savings plans to provide flexibility.
And they should offer more financial advice and education at work to help them understand the decisions they have to make.
At a policy level, incentives for making pension savings should be increased through tax benefits and employer contributions.
Company pension plan accounts should be designed to be more portable, so they can accompany employees when they change jobs.
And simplified plan designs should be made available for smaller businesses that do not yet sponsor a retirement plan.
Products such as private annuities should be included in company pension plans to make it easier for employees to manage their savings after retirement.
Finally, Aegon argues that governments should promote greater awareness of increasing life expectancy and changing work patterns.
This means introducing policies encouraging companies to take on and retain older employees, promote a savings culture among those in work and provide those preparing for retirement with relevant information.