Marvin OnumonuEmployers are set to take on most of the responsibility for tackling the UK’s retirement adequacy crisis, according to research from Hymans Robertson.
The firm’s latest paper, launched as part of its three-year Retirement Adequacy Project, found that although employers already face plenty of pressures, they will need to step up and address the challenge of retirement adequacy to deliver real change.
The report also noted that providers, the state and individuals all have a part to play, but the employer is central to improving outcomes.
The research highlighted that employers are well placed to provide savings and connect all other stakeholders, putting them at the heart of the retirement adequacy solution.
Individuals have the most knowledge of their own circumstances but less understanding of pension systems.
Leonard Bowman, head of corporate at Hymans Robertson, said: “Retirement adequacy is one of the most pressing challenges facing individuals in the UK today.
“The potential risks to employers if it is not addressed are wide ranging and serious.
“While individuals, providers and the state all play a role, none have the same combination of reach and influence as employers.”
Bowman added: “Employers are uniquely positioned to influence retirement outcomes.
“They connect employees with providers and hold a position of trust with employees due to the employment relationship. That’s why employers can make such a difference.
“One way or another, employers will be the driving force for positive change, the question is whether this will be on a proactive or reactive basis.”
He said: “We firmly believe a proactive approach will ensure companies address the adequacy crisis in ways that best align with their strategic priorities, rather than being caught on the back foot.
“The question now is what that means in practice. What strategies and tools will enable this transformation?
“From innovative benefit design to clear communication and financial wellbeing programmes, employers have the power to embed savings habits and improve outcomes across entire workforces.”
Mark Stansfield, actuarial consultant at Hymans Robertson, said: “The Pension Commission will present its recommendations to combat the retirement adequacy crisis and this may lead to government intervention.
“We believe employers would rather take a voluntary and comprehensive approach to make positive strides to tackle the crisis, in a way that fits the specific requirements of their employees.
“The alternative could be a mandated ‘one-size-fits-all’ approach set out by the government.”
Stansfield added: “Employers need to act now to make retirement adequacy a reality for their workforce, in a way that best aligns with their specific business priorities.”
