Retirement is changing – are employers ready to help?
Findings from life assurance and pensions company Standard Life’s latest Retirement Voice study show a clear picture of how the shape of retirement is shifting – and the steps employers can take to help their employees achieve better long-term outcomes.
Auto-enrolment has put many employees on auto-pilot
Auto-enrolment has transformed pension participation in the UK. But for many employees, it’s also created a dangerous misconception: that being enrolled means you’re saving enough.
Indeed, the findings show 45% of employees with a defined contribution (DC) pension believe that auto-enrolment will lead them towards a secure retirement.
This belief is strongest among younger workers – 61% of Gen Z (those aged 18-28) and 51% of Millennials (those aged 29-44) think they’re on track for a comfortable lifestyle in their later years.
For those only paying the default contribution, the reality will be very different. Further research from the Standard Life Centre reveals that over half of DC pension savers retiring between 2025 and 2060 aren’t on track to meet their retirement income goals.
This gap matters. It’s a critical opportunity for employers to step in – helping employees understand what their future could look like and how even small contribution increases can make a big difference to their future lifestyle.
DC pension savers are less assured about their retirement choices
Planning for a good retirement isn’t just about saving – it’s also about making the right choices when the time comes.
Among pension savers aged 50+, those with a DC pension are the least assured about turning their savings into an income – with 32% saying they wouldn’t feel confident in their ability to make a good decumulation decision. This compares to just 19% of people who hold a personal pension.
Given the high-stakes decisions employees will face as they approach and move into retirement, employers have an important role to play.
Those who can engage their employees early – through education, tools and effective support – will not only help them to make better outcomes more likely, but also help them be more confident overall about their future.
The retirement expectation gap is widening
People want to retire earlier than they expect to. Across almost every demographic, the ideal retirement age is 62, but most believe they’ll retire at 67. We call this the ‘retirement expectation gap’.
As a nation, we’re working longer – with people retiring, on average, five years later today than they were in 1994. And while 80% of people are confident they could still do their job at age 60 – only 49% say the same for age 70.
This should be particularly concerning, especially as 50% of employees think they’ll need to work beyond their State Pension age.
Planning makes a difference. Those who actively plan for their retirement are more likely to believe they can retire closer to their desired age. This underlines the true value of getting employees to actively engage with their pension – it could help to shave a few years off their working life.
Uncertainty is shaping a new future
We’re now halfway through this decade and 83% of people say the world feels more uncertain than it did just a few years ago.
For obvious reasons, this makes it harder for employees to plan for their life after work. Tied to this, there’s significant uncertainty about the future of the pension system – with only half of people (51%) saying they think the State Pension will still be available for everyone by the time they retire.
It’s little wonder that 73% of people think retirement in the future will be more complex than it is now.
Younger generations are turning to social media and AI for guidance – particularly Gen Z. While these tools can help, they also carry risks if the information isn’t regulated. Employers have an opportunity to steer employees toward trusted sources and practical steps that improve outcomes.
The bottom line
Retirement is changing – and so too are employee expectations. Employers who take an active role in helping their employees plan, save, and make informed decisions can close the confidence gap and create better futures for everyone.
You can find out more by reading the full Retirement Voice report.
Supplied by REBA Associate Member, Standard Life
Standard Life are part of Phoenix Group, the UK’s largest long-term savings and retirement business. We both share an aligned ambition to help every customer enjoy a life full of possibilities.
