Shifting pensions landscape: research round-up
The arrival of a new government heralded a flurry of promises for a thorough review of the current pensions market. And the government hasn’t wasted any time putting this into action.
Earlier this week (Wednesday 4 September) it launched its Pensions Investment Review with a call for evidence inviting input, data and information from interested parties.
The review aims to find out how to boost investment, increase saver returns and tackle waste in the pensions system. The call for evidence closes at 11:59pm on 25 September 2024.
Yet, change within the pensions market has been ongoing for some time.
Two key changes that will impact employers include the tabled amendments to auto-enrolment eligibility and adjustments to the lifetime allowance.
There are also growing calls to increase minimum auto-enrolment contribution rates, as concerns around retirement adequacy heighten.
Here we round-up the latest pensions and retirement research, which can be found in REBA’s research and guides library, to help you better understand the challenges facing both employees and employers as they strive to achieve the best outcomes.
Understanding retirement in the UK
Recognising how the retirement landscape is shifting is essential to understanding how employees’ plans for later life may affect your workforce.
Research from the Institute for Fiscal Studies examines the changing patterns of retirement in the UK for different groups in society, including employment patterns and how people are funding their retirement.
This information will help to inform strategies to both retain key employees (and their skills) within the workforce, but also to support employees to retire when they want to.
Tracking attitudes
Scottish Widows’ Retirement Report is now in its 20th year and has kept track of the nation’s attitudes towards saving for a pension.
This year it found that there is growing polarisation between those whose wages have been able to keep up with the cost of living and those whose have not, and this is following through into what people believe their retirement might look like.
There was also continuing evidence that people are struggling to navigate their choices. Many don’t know how much to save or what their options are.
It’s clear that helping employees to save more and providing clear guidance about their options around retirement are key issues for employers to consider.
Aviva’s Working Lives Report 2024 also found that employees are feeling the squeeze on their income, with three-quarters of employees (73%) saying the cost-of-living crisis has made them feel more anxious about their finances.
For employers, there is a significant sense of responsibility when it comes to adequately preparing and supporting employees to save for retirement.
Indeed, 85% of employers say they feel responsible.
How employers go about supporting their workforce will often depend on demographics and understanding what type of support will deliver the best outcomes.
Delivering better outcomes
This is where Aon’s DC Pension Scheme Survey – Five Steps to Better Workplace Pensions can help.
This report focuses on five areas to help provide better outcomes for defined contribution savers and employers.
Actions such as considering the design and structure of a pension to deliver better outcomes and reduce the governance burden are covered.
Assessing whether contribution levels are adequate, and investments are delivering returns were tabled as areas of focus.
The research also found that three-quarters of respondents provide wider financial wellbeing support outside of pensions, or plan to provide this in the next two years.
With so many pensions’ changes on the horizon, staying ahead of the latest research and thinking will be critical.
