Why are British workers delaying retirement?

More and more workers in Britain are delaying their retirement, which has employers worried. New research released by professional services firm Towers Watson shows that almost half of all businesses in the UK are scared that workers cannot afford to retire at the right age.

The Fit for Retirement report, which surveyed more than 100 UK businesses, showed that people are delaying their retirement because they simply cannot afford to retire.

“More people in the UK are faced with having to delay their retirement, with potential consequences for companies that don’t encourage their employees to take control of their financial futures,” Phil Percival, head of the FiT Age Programme at Towers Watson, said in a media release.

People in the UK are working longer than they used to, according to official government statistics. In 2014, there were over 1 million people aged 65 and over in work compared to 874,000 at the end of 2011.

Employers are concerned that workers being unable to retire can cause issues such as higher stress levels, and a lack of engagement from older employees. Companies also expressed fears that an aging workforce can stunt the development of its younger employees, and lead to talented youngsters leaving companies due to lack of progression. Importantly, firms are also concerned that issues such as a lack of engagement can translate into increased costs for the companies themselves as workers become less productive.

One of the key reasons people are retiring later in age is due to a lack of financial awareness — because aren’t saving enough early on. Of the 100 companies surveyed, only 10 believed that their employees knew how much they needed to save for retirement, and just 40 thought that staff knew what to expect from their pension pots.

Phil Percival cited the “complexity of our pensions system” as one reason that people don’t save enough for retirement. He said employers must be more proactive in educating employees about the importance of saving for retirement.

New measures were recently introduced by the government to try and give more choice in pension savings, but less than 30% of employers surveyed by Towers Watson think that the reforms will help their employees to save more.

Employers will continue to risk loss of productivity and financial losses, unless they put more effort into educating staff about the importance of pensions, says Phil Percival: “Education, education, education is the key to overcoming these barriers and helping employees clearly see the financial goals they need to achieve to meet their expectations for retirement.”

This article is published in collaboration with Business Insider. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Will Martin is a writer at Business Insider UK.

Image: An employee works at the production line. GEORGIA-RUSSIA/TALKS  REUTERS/David Mdzinarishvili.