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28 Jul 2022
by Debi O'Donovan

REBA Inside Track: the ticking timebomb of Generation X in the workforce

Employees born between 1965 and 1980 were the generation caught in the middle of pension changes that left many without decent retirement savings

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As a fully paid-up member of Generation X, I sometimes feel we are the forgotten generation. We’re too small a cohort to make a major impact on the workplace with all the attention going to Baby Boomers and Generations Y and Z.

But we’re carrying a secret that is set to cause significant problems for employers, but more especially ourselves.

We’re the age group (born between 1965 and 1980) that arrived in the workplace just as defined benefits pensions were being replaced by defined contribution schemes and not long after compulsory pension contributions were scrapped.

Pensions all change

Like many others on the older end of Generation X, I started my career in two defined benefits schemes in two successive jobs. But by the time I was 30 I was left to fend for myself with defined contribution pension plans (first a group personal pension and later a stakeholder pension).

How much, and even whether I saved, was up to me, as was keeping an eye on whether the investment fund(s) I selected where right for my situation.

Auto-enrolment was still years away (launched in the UK in 2012) so many saved too little, nothing at all or planned to rely on property as their pension. We are the seriously undersaved generation.

We were also the first generation to use computers at school (just about – I was still on a Commadore 64 back then) and, as we entered work, computers that were barely more than word processors were becoming ubiquitous. The internet entered our lives in the 1990s, as did mobile phones (and, later, smartphones).

Keeping up is a struggle sometimes

We’re not digital natives. We’ve had to learn fast to move from analogue childhoods to digital adulthoods.

With advances in technology moving faster every year and younger generations grasping the changes faster than many Gen Xers, we’re at risk of not keeping up. I hear it from my peers – as we age many do not have the energy to keep changing and learning (as an aside, I believe you can learn and change at any age, but I do understand the fatigue after decades in the workplace).

So here is the rub: if large tranches of Generation X do not have decent pension pots so can’t afford to retire and cannot keep up their work performance due to digital advances as well as physical energy, employers find themselves in a pickle. We’ve seen this ticking time bomb coming for years, and it is starting to play out in workplaces.

Employers cannot be responsible for the decisions taken by employees over the years (or lack of decisions), but there are some supportive actions that they can put in place to mitigate the problem they are going to have to tackle.

Because the even bigger tragedy that will hit Generation X is what happens once they retire. Any pensions savings support, even the auto-enrolment bare minimum, they received from their employer will be gone.

Reaping rewards - or a whirlwind

We’ll be the first generation heading out into the wild making our own decisions about how to manage our pensions savings into retirement income. If we’ve not made the best decisions while accumulating a pension, then what hope for us to make good decisions during retirement? From pensions freedoms and drawdown to annuities and miscalculated longevity, the options and risks are enormous for those picking through this minefield without a regulated financial adviser (the case for the majority).

Employers wanting to support older workers at work, and eventually gently out of the workplace, are in an excellent position to provide guidance and education to a generation that truly needs it.

From financial wellbeing resources, tools and education to later life career planning and considering earning options beyond full time work, employers can support older workers to move out of work without the harshness of performance managing them out.

Generation X might have been largely forgotten in the workplace for decades, but we could be the ones to change how employees retire over the next decade or two.

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