Why retirement readiness should be on every employer’s agenda

Employers can help employees’ retirement preparations by building confidence, improving understanding and earlier engagement with the process.

Automatic enrolment has been a real success story, bringing far more UK employees into workplace pension saving and giving them a valuable foundation for later life. But getting people into a scheme doesn’t necessarily mean they’ll be ready for retirement.

Our latest workplace pensions report, Workplace pensions – retirement ready?, points to a clear disconnect between expectation and action. Many employees can picture life after work, but far fewer know how they’ll pay for it. This isn’t only a pensions issue. It can influence financial confidence, employee engagement, workforce planning and wider wellbeing.

Thinking about it isn’t the same as planning for it

The research shows that 51% of employees have thought a lot or quite a lot about their financial needs in retirement. Yet only 18% have a clear retirement plan, and 28% have no plan at all.

There are signs that employees are looking ahead - 48% have considered when they’d like to retire and 45% have pictured the lifestyle they want. However, fewer have checked whether their savings are on track or calculated the income they’re likely to need. Aspiration, on its own, isn’t a retirement plan.

That distinction matters because retirement decisions are becoming more complex. Employees need to consider contribution levels, how long their savings may have to last and how they’ll access their pension. Without a plan, they could reach retirement lacking the confidence to make informed choices at the point those choices matter most.

Confidence starts with understanding

Among employees who’ve thought extensively about their financial needs in retirement, 74% believe they’re saving enough. That falls to just 17% among those who’ve given the subject no thought. The figures don’t suggest that consideration alone guarantees an adequate outcome, but they do underline the connection between engagement and confidence.

Understanding of retirement options is also limited. Among employees saving into a defined contribution pension, 48% either don’t, understand income drawdown (when someone can take money from their pension while the remaining savings stay invested), or haven’t heard of it. The gap is wider among women, at 59%, compared with 37% of men. If employees don’t understand the choices available, it’s harder for them to plan with confidence.

Why aren’t more employees seeking support?

Despite the scale of the decisions involved, many employees aren’t asking for help. Nearly two-thirds (64%) haven’t sought advice or guidance on how much they should contribute to their pension, while 63% haven’t sought such help to understand their retirement options. These are separate but closely connected gaps - how to build enough savings and what to do with them later.

The research also shows that employees with a workplace pension who sought advice on saving for retirement were more likely to have a clear retirement plan. More than nine out of 10 (93%) said they had one, compared with 69% of those who hadn’t sought advice. Yet, although financial advisers remain one of the sources employees trust most for retirement guidance, only 11% had consulted one in the previous year.

Employers have an opportunity to help close that gap by making support accessible, easy to understand and relevant well before retirement is imminent. The aim isn’t to replace regulated advice, but to help employees recognise when support could benefit them and where they can access it.

Recognising the different barriers

Effective support needs to recognise that not all employees face the same barriers or start from the same place.

Our research indicates that women are less likely to have a retirement plan and less likely to seek advice - 35% of women have no plan compared to 19% of men. Employees aged 35–49 also appear particularly at risk of a planning gap. Within this mid-life group, 68% haven’t sought help with pension saving, even though retirement is already on many of their minds.

That makes a strong case for targeted, timely support rather than a single message for everyone. Employers could consider communications shaped around career stage and need, prompts at relevant moments, clearer signposting to guidance and advice, and straightforward tools that help employees take the next step.

Turn pension participation into retirement readiness

Workplace pension success shouldn’t be measured simply by how many employees are saving. It should also reflect whether they understand their options, feel confident about their progress and have a realistic plan for the retirement they want.

Clear communications, practical education and access to trusted support can help bridge the gap. Developments such as targeted support will add another route for helping employees move from awareness towards informed action, although they won’t remove the need for employers to make pensions engaging and accessible.

The strongest outcomes are likely to come when workplace pensions sit within a wider financial wellbeing strategy rather than being treated as a standalone benefit. By helping employees build confidence, improve understanding and engage earlier, employers can support better retirement outcomes. Automatic enrolment tackled the participation challenge.

The next task is to turn that participation into meaningful preparation.