Member Article

Women expect to be hit hardest by pensions time bomb

4th April 2014, Newcastle: The majority of people in employment in the UK will not be able to support themselves when they reach retirement age, and women are especially concerned.

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. However, the situation is particularly challenging for women with 1 in 4 (28%) stating that they are not in a position to contribute to a pension compared with only 17% of men.

The study conducted amongst more than 2,000 working adults revealed that almost a fifth (19%) of women believe they will have to downsize their home to fund retirement as opposed to under a sixth of men (14%) and six per cent of people believe 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 60 and 350 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.

Ceara Metcalf – Product Manager for Payroll in SSB commented: “It’s no secret the UK is sat on a ticking pensions time bomb, but it’s concerning to see that women feel that they are going to be harder hit when it comes to retirement. The new legislation around auto enrolment affects the majority of workers, and making contributions early could go some way to alleviating this fear.”

“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.” added Metcalf.

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