Why better financial education and support in the workplace could help with retirement planning
There is no doubt that the pandemic has had a major impact on people’s pensions, savings and jobs, forcing many to rethink and, in some cases, delay retirement plans.
This serves as a timely reminder of the need for flexibility in retirement planning, as well as for earlier and better financial planning. Better financial education and support in the workplace would help, so people start actively thinking about their retirement planning needs earlier in their career.
This need is also highlighted by the figures produced in January 2021 by HM Revenue and Customs, which shows that £42bn has been withdrawn from pensions since the pension freedoms were introduced in April 2015.
The impact of Covd-19 can be seen by the fact that in the final three months of 2020, 360,000 accessed their pension, a 10% increase year-on-year. Autumn usually sees a slight drop in the numbers of individuals withdrawing and according to HMRC, this change in behaviour may be attributable to the impact of the pandemic.
This continued growth in the number of individuals accessing their pensions suggests that more and more working people are looking to their pension pot to manage their expenses or cover unexpected costs, not the purpose for which pensions were originally set up. The upshot is that tens of thousands of savers risk running out of cash in retirement, according to new data from the FCA.
Discussions held with many employers shows that most recognise that both the company and employees would benefit from being better informed about financial matters, and retirement planning in particular. With over 30% of the workforce now over 50, according to data from CIPD and ILC, it could be argued that the need for financial advice through the workplace has never been greater.
Financial reviews can provide a good opportunity for employers and employees to consider career plans, finances, wellbeing and retirement. They can help people get the most out of their career in later life — which benefits the employer as well.
To discuss any of these issues, please do not hesitate to contact Kellands Corporate today.