Retirement roadmap: Where will pension trends take employers in the next 10 years?
Our understanding of retirement is changing, Steve Watson told attendees at the Key future changes to pensions that employers need to know about REBA webinar on 10 July 2024.
The idea of a cliff edge retirement - the point at which an employee stops working - will be a thing of the past, the director of policy and research at NatWest Cushon said.
Instead multiple pots will continue to grow. “It’s not going to be uncommon for people to have had 14 or more jobs by the time they start taking money out of their pension funds,” he said. “People will move to working part-time and working longer, [with more] career changes. So it’s [about] winding down instead of an absolute sudden stop.”
He highlighted 5 other trends for employers to look out for.
1. Auto-enrolment contribution minimum levels may increase
Although auto-enrolment has made it easier for millions more people to save for their pensions pensions adequacy is still a concern. “I think that is something for employers to look out for. I think it will be a phased approach over the next five to ten years,” Watson said.
2. Big pensions providers will dominate smaller ones
“We will see a big focus on a more consolidated DC pension market – at scheme level and member level. There are a couple of levers and enablers that need to come into play to make it a lot easier for pension schemes to invest [in the UK],” Watson said.
3. Technology will solve many challenges
The government’s planned pensions dashboard, and other apps from commercial providers, will allow people to see all their pension funds – including “lost pots” – in one place. “Pensions are just spoken about in isolation of an employee's entire finances or future financial planning. And it means there's just no wider context to be able to make meaningful decisions,” Watson said.
4. Helping people with housing will be a priority
If more people are going to be paying off mortgages or renting in later life, then they are going to need bigger pensions. “For employers there are other tools, like lifetime ISAs, which can really accelerate people onto the housing ladder,” Watson said.
5. Targeted support may help employees
Within the Advice Boundary Review, targeted support may bridge the gap between advice, support and guidance. “If it does come out, it will give a lot more freedom to providers and employers to give more valuable information and support that employees do need to make the right decision for them,” Watson said.
In partnership with NatWest Cushon
Cushon is an online savings&investments platform provider, offering holistic workplace savings.
