A third of over-65s could still be in work if trends seen over the last decade persist, pensions consultants Buck have warned.
Fraser Smart, managing director at the pensions, employee benefits and investment consulting firm said there was ‘no doubt that some people cannot afford to retire’. He said an ageing workforce ‘could stop employers hiring younger (and perhaps cheaper) workers, [which] will generate other problems’.
Recent Office of National Statistics figures showed that in 2011 one tenth of over 65s are still working. For the age group 65-75, around 16% were still working compared to 8.7% of the same age group in 2001.
‘Employers paying minimum amounts in automatic enrolment schemes today may take the attitude that it’s not their problem,’ he said. ‘[But] this will have knock on effects for employers, who are going to have to deal with an ageing workforce, or provide a pensions incentive to retire.’
He suggested that an increased number of working people have not realised that defined contribution pension schemes do not deliver the sort of outcomes they were expecting to fund an adequate retirement.
A report by NOW, cited by Smart, suggested that a third of people believe that ‘Generation Y’, those aged between 18 and 31, will struggle to save enough ever to retire. It also found that 51% of young people themselves believe they will be worse off than their parents because of the rising living costs and a less generous state pension.
‘So, unless employers will still need their workers when they are 74, they need to ensure their workers’ pension arrangements provide sufficiently for a retirement earlier than that,’ he concluded. BY JUDITH UGWUMADU