More than a third (34%) of UK employees named funding retirement as their top money worry, with the issue coming out on top for the second year running, according to the new Changing Trends of Financial Wellbeing report from Close Brothers.
The report also showed that:
- One in five employees (21%) admit to worrying about their financial health daily
- 87% of UK employees think it’s important to save into a pension and in light of the pandemic, over 10% of employees plan to save more into their personal and workplace pensions
- But more than a quarter (27%) thinking that auto-enrolment solves their retirement money worries
When it comes to worrying about retirement funding, it comes as no surprise that those nearer to retirement age (55-64 year olds) are most concerned (50%)
Waning confidence levels
For those who gave a score below 5/10 when it comes to their level of financial confidence, Close Brothers asked how long it would take for them to feel confident in funding their retirement. Concerningly, 46% admit they don’t think they’ll ever be confident, and among those approaching retirement (aged 55+) who are struggling, 62% don’t think this can be resolved.
Pensions remain the most popular savings vehicle
Just 61% of employees in big businesses are saving for their retirement using a workplace pension, a figure which rises to three quarters (75%) of those 55+. 45% of employees are saving for retirement using a simple savings account, and 34% with a current account – only 17% are investing in stocks and shares (outside of a pension), with 15% in an Investment ISA.
How much and how often?
88% of employees say that they save into their pension, even if rarely, while 39% save the maximum they can afford on a consistent basis. This rises to almost half (47%) of those aged 55 and over. Reflecting the incentive offered by auto-enrolment, a third (31%) of employees save the minimum amount necessary in order to take advantage of employer matching. 8% of employees are doing nothing to save for their retirement, which rises to 16% among those age 18-24.
The appetite for retirement saving surpasses the reality of it; 87% of UK employees think it’s important to save into a pension. There are also unreal expectations that need to be addressed; more than a quarter of employees (27%) thinking that auto-enrolment solves retirement money worries.
The Covid-19 Impact
More than half (54%) of workers in large businesses felt financially prepared for Coronavirus, significantly higher than the 44% of average UK adults. 50% of employees plan to enhance their financial preparedness, with around a quarter already having made changes (24%) and a comparable proportion looking to make changes in the near future (26%).
Of the people planning to make changes to their financial planning, there’s some good news for retirement savings. 13% of employees plan to save more into their personal pension in light of the pandemic, and 11% will increase their contribution to their workplace pension.
But it’s not all positive. 8% will save less into their personal pension in order to access cash now, and even more worrying, 7% plan to opt out of auto-enrolment.