By Steve Butler
Supporting older workers has never been more important. The pandemic has had a big impact on us all, but some mid-career employees have been forced to rethink plans and, in some cases, delay retirement.
A YouGov poll published the end of last year highlighted that 13% of over 55s are planning to delay their retirement due to the impact of the virus, while 52% of all UK adults are concerned that they won’t afford their current lifestyle[i].
Other data from the English Longitudinal Study of Ageing[ii] (ELSA) which surveyed over 6000 workers aged 50-plus, showed one in eight (13%) have changed their retirement plans because of covid, with 8% planning to retire later and 5% planning to retire earlier.
Older people have also been disproportionately bearing the brunt of redundancy. Analysis of Office for National Statistics (ONS) data by over 50s web site Rest Less[iii] found the number of jobless over 50 has increased by a third in a year.
They found a significant minority of more mature people working before the crisis have now retired: 6% of those aged 66–70 and 11% of those aged 71 and older. Some may have planned it this way, but over half had not intended to. Had the coronavirus caused them to do so?
Other factors influencing this decision could be the impact of stock market fluctuations, declining annuity rates and low interest rates.
It is becoming increasingly clear that businesses will need to do much more to support older employees to ensure they are as financially prepared as possible to retire.
The forgotten 55s
Our own research shines a light on the lack of support there currently is in the workplace.
Last year we surveyed[iv] more than 300 businesses on their approach to financial wellbeing and found 61% do not provide any pre-retirement or financial guidance to employees approaching the age when they can access their pension pots (55+) – leaving many in the dark when it comes to planning their financial future.
This is despite the fact eight out of ten employers said their company and people would benefit from being better informed about all things financial; and retirement planning topping the list of what employers believe would be most valuable to their staff.
A lack of financial advice and neglecting this cohort of workers could lead to poor financial decisions which could also put people’s retirement plans into jeopardy.
Data from the Financial Conduct Authority (FCA) [v] published in October last year suggested that tens of thousands of savers with large pensions are making withdrawals at such rapid rates that they risk running out of cash in retirement. The 2015 pension freedom reforms made it easier for people to withdraw cash from defined contribution schemes and with no caveat in place to insist on people taking financial advice first, employers have an opportunity to step in and plug the advice gap.
With one in three of employees forecast to be over 50 by 2025, this is a large section that employers should not ignore.
Strategies to support older employees
We also recommend employers carry out ‘Midlife Reviews’ – formal discussions with staff who are at a mid-point to consider the rest of their working life.
These focus on career, wealth, pension plans and health and help ensure people can continue contributing as much as possible, for as long as possible.
They are designed to help employees gain a clear perspective on what they want from their future, but might not have thought through, and for employers to safeguard their business and not lose key people who they have invested in over the years and who still have much to offer.
From a financial perspective, discussions could involve looking at whether colleagues have enough money to make their pre-retirement lifestyle aims possible, for example working fewer hours ahead of stopping altogether, while ensuring there is enough money in the bank to do so.
Financial advice should be offered to help staff understand their pension options and the impact that drawdown – taking money out of their pot may have on their future income. This can help them avoid taking unnecessary risks with their nest egg.
At a time when there is so much uncertainty, offering financial and career support is something most older workers will find enormously valuable.
To enable employers to provide financial support for their workforce, Punter Southall Aspire has launched ‘Aspire to Retire,’ a technology platform to help staff plan their retirement with more knowledge to hand. It offers them interactive tools, helpful resources, videos, communications, and articles to help people visualize – and plan – for the kind of retirement they desire.
For more information visit: www.psaspire.com
About the Author
Steve Butler is CEO of Punter Southall Aspire, a UK workplace pensions and finance planning business specialising in retirement services.
References
- [i] https://www.personneltoday.com/hr/pandemic-retirement-pension-plans/#:~:text=This%20is%20according%20to%20a,to%20afford%20their%20current%20lifestyle.
- [ii] Microsoft Word – ELSA_Wave9_FINAL (filesusr.com)
- [iii] https://restless.co.uk/press/the-number-of-unemployed-over-50s-has-increased-by-33-in-just-a-year/
- [iv] https://stories.puntersouthall.com/story/financial-wellbeing-2020-survey/
- [v] https://moneyweek.com/personal-finance/pensions/602109/dont-overdo-pensions-drawdown
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