With worries about retirement finances impacting the productivity and wellbeing of much of the workforce, what role do employers and government have in making employees feel more secure? Stephanie Twidale outlines the issues.Â
As the UK workforce grows older, concerns about financial security in retirement are becoming ever more common.
Many employees are worried that they will not have sufficient income to maintain their desired standard of living once retired. Hymans Robertson’s survey in July found that a fifth of workers between the ages of 40 and 60 are so concerned about retirement finances that it affects their work.
Financial anxiety can significantly impact workplace productivity, absenteeism, and presenteeism. It’s also well known that employees who are worried about their financial future are more likely to experience stress and anxiety at work when compared to their peers.
Impacts on health
The impact of this on wellbeing is significant. Stress and anxiety can impair cognitive function, reduce the ability to concentrate, make decisions, and solve problems effectively.
Retirement anxiety
Worries about retirement finances affect work for a fifth
More employees fear they won’t be able to afford retirementÂ
In turn this can lead to lower productivity levels, impacting overall business performance as well as triggering physical health problems – for example high blood pressure – increasing absenteeism, as employees take time off to look after their health.
Presenteeism, occurring when employees are physically present at work but are not functioning at full capacity, can be even more damaging than absenteeism. It often goes unnoticed and can lead to significant drops in efficiency and morale.
Employers have a critical role in alleviating financial anxiety among their employees. By providing support and resources within the workplace, they can help employees feel more secure about their finances and improve workplace productivity.
Financial education and guidance can empower employees to take control of their financial future and reduce anxiety. We believe this can be done in a number of ways.
- Workshops and Seminars: Employers can offer sessions on financial planning, retirement savings, and investment strategies to educate employees.
- One-to-One Counselling: Employers can provide access to financial advisors who can give personalised advice and help employees navigate complex financial decisions.
- Employers could also offer tools and resources such as online budgeting tools, retirement calculators, and other financial planning resources.
- Similarly, they can regularly update employees via newsletters, emails, and the intranet with forthcoming sessions on wellness and retirement.
Alongside practical interventions such as these, employers should build a financial wellness culture by encouraging open dialogue about finances, making it a regular topic of communication in the workplace.
That culture should prioritise continuous support for all employees, furthermore, not just those reaching retirement.
Government’s role
As the new government begins to make its mark, there are several ways in which the pensions minister and the wider government could help to alleviate retirement anxiety, making retirement planning more accessible and transparent.
Firstly, the ongoing development of the Pensions Dashboard will allow individuals to see all their pension savings in one place, increasing transparency and helping employees better understand their retirement savings and plan more effectively.
Similarly, the Financial Conduct Authority’s advice boundary review has suggested providing pre-retirement guidance for those approaching retirement, helping individuals make informed decisions about when to retire, how to draw their pension, and how to manage their savings to ensure a comfortable retirement.
In addition, the surprise Pension Schemes Bill unveiled in the King’s Speech introduces measures to enhance pension security and accessibility.
The Bill includes expanding auto-enrolment by lowering the minimum age and earnings threshold, with the aim of increasing pension participation among younger and lower-income workers.
Financial wellbeing culture should prioritise continuous support for all employees, furthermore, not just those reaching retirement.”
It also mandates pension contributions for gig economy workers, providing them with retirement benefits similar to traditional employees. Additionally, the Bill implements stricter regulations and oversight for pension scheme providers to ensure transparency and reliability.
Financial wellness culture
These measures are designed to enhance financial security and peace of mind for UK workers as they plan for their retirement.
It’s clear that retirement anxiety can have far reaching consequences for employees. For employers, there is a clear and vital role; to provide support to their employees via financial education, access to financial resources, and the ability to seek expert advice.
The anxiety surrounding insufficient retirement income is a significant issue that impacts workplace productivity, absenteeism, and presenteeism.
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If employers can take action, when combined with the proposed pension reforms, the position looks brighter for employees.
By fostering a culture of financial wellness, employers can help their employees feel more secure about their financial future, leading to a more productive, happier and healthier, and more engaged workforce.
