Member Article

17.4 million people bracing themselves for pensions time bomb

More than half of adults expect to be working well past retirement to make ends meet, Sage study finds

The majority of people in employment in the UK will not be able to support themselves when they reach retirement age. Research commissioned by business software and services company Sage has discovered that six out of ten people working in the UK – 17.4 million – now expect to be forced to work past the retirement age to earn enough money to live on during their twilight years.

The study conducted amongst more than 2,000 working adults revealed that almost a fifth (17%) believe they will have to downsize their home to fund retirement and six per cent think they will need to sell their home to live when they stop working. As a result many wish they had begun saving for their retirement earlier with just under half (45%) stating that people should begin contributing towards a pension before they are 22 years old to ensure a comfortable retirement.

The findings come as the UK enters a critical time for Auto Enrolment. Last year, the Government introduced legislation which requires employees to automatically enrol all eligible employees* into a pension scheme requiring contributions from both employer and employee. This year businesses with between 350 and 60 employees will be required to auto enrol, meaning as many as 50,000 firms will enrol their employees into a scheme as the government attempts to tackle the pensions deficit and get people saving earlier in their careers.

However the study also showed that nearly 1 in 5 (18%) people have not heard of pensions auto enrolment, a worrying figure given its importance in addressing the pensions black hole. The onus is on each individual business to communicate the scheme to their employees; yet almost two thirds (61%) of the workers surveyed said that they had found out about the change in legislation through newspaper articles or the government’s advertising campaign.

Lee Perkins, Managing Director of Sage’s Small and Start up Business Division commented: “It’s no secret the UK is sat on a ticking pensions time bomb, but our findings suggest if more people understood what auto enrolment meant for them they might be less worried about the future and their retirement.

“Government legislation is trying to tackle the issue, but clearly more needs to be done to encourage people to save earlier. Contributions are due to rise in 2018 and although auto enrolment is a good first step, more must be saved to ensure a comfortable retirement and we must take charge of our own destiny to make this happen. This represents a fundamental shift in thinking about the future. If you’ve not heard from your employer about their plans for auto enrolment it’s time to ask some pretty fundamental questions,” added Perkins.

This was posted in Bdaily's Members' News section by Sage UK .