Geraint Johnes: Will the desire for advice and guidance see a shift back towards paternalism?
Increased longevity has put pressure on workers both to save more over their working lives and to postpone their retirement. The requirement for businesses to automatically enrol their workers into pension schemes has relieved pressure on the state pension, which is ill-equipped to provide full support for lengthy retirements.
‘Insufficient 8 per cent’
Yet it is highly likely that the minimum 8% employer contribution to pensions under auto-enrolment – to be introduced in stages in over the next two years – will prove to be insufficient, and will be subject to further uplift. It is not surprising, therefore, to see that a substantial majority of respondents expect there to be an increased focus on employee benefits (including employer contributions to pensions) by 2025.
Challenges of postponed retirement
The introduction of auto-enrolment has been facilitated, particularly in the case of smaller employers, by the support of NEST and private providers such as B&CE. These organisations are likely to play an increasing role in meeting the growing demand for pensions advice and more general financial education.
Meanwhile, postponed retirement presents challenges that have not yet been widely addressed by businesses, and it is not surprising to find that a significant minority of respondents report a disconnect between pension, HR and corporate strategies.
An ageing workforce affects succession management, career development, and introduces demands and opportunities for flexible working that call on employers to take a fresh strategic view.
Professor Geraint Johnes is director of research at The Work Foundation – part of Lancaster University
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