Employers need to educate staff on saving for pensions

Two-thirds of UK adults plan to work beyond retirement age, according to a report produced by Aviva (‘Retirement at ‘standard’ age not an option for almost 70% of UK workers’, Personneltoday.com, 19 May).

Working beyond retirement to generate a bit more cash for your pension is one thing, but waiting until later in life to save the bulk of the money needed for retirement is a risky strategy.

The fact is most people do understand the importance of saving for retirement, but almost everyone under-estimates the amount they should be putting away, or starts saving far too late in life.

The responsibility to educate employees, and help them attain their pension income goals, must be taken on by employers. Employees need guidance on how they can build a decent pension pot, especially those that are members of defined contribution (DC) schemes, rather than final salary schemes. Securing a comfortable retirement with a DC scheme means getting three key things right: saving from an early age; contributing enough money per month; and getting the balance of investments right. These key factors must be properly communicated to staff.

Without suitable financial assistance and education, many employees will have no choice but to work into their 70s – or even 80s – in order to avoid poverty as a pensioner. While retirement planning is complex, it’s also incredibly important to get it right.

Lauren Peters, head of financial education, MoneyinMind.com

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