Pensions: too many rainy days, not enough saving

Millions of people of working age in the UK are living without any private or company pension. I recently watched a report on BBC Inside Out about an 83-year-old man named Charlie West who cannot afford to retire, even after a long career in sales. Charlie says that he was unable to plan for retirement due to the nature of his employment. He was unable to save as the companies he worked for kept being taken over and he was frequently made redundant. He says he is forced to work as he cannot afford to live. The image of Charles working hard a call centre, surrounded by youngsters, is heart-rending. There is a tragedy intrinsic to seeing old-aged people forced into labour in order to survive.

And yet, despite all the government warnings and plans to implement blanket pensions across the workforce, many workers are not saving enough for their retirement, with some not saving at all. It’s staggering when you look at the statistics. For instance, one third of households in the north-east of England have no private pension according to latest government statistics. As a nation, we are potentially sleepwalking into a crisis of epic proportion.

Employers take note, here are some facts and figures about retirement and pensions:

  • The default retirement age (formerly 65) no longer applies. This means that, generally, employees can now work for as long as they want to. Employers can set a compulsory retirement age if they can clearly justify this limit – such as physically demanding roles, which an aged worker would struggle with on a –day-to-day basis. However, retirement age is when an employee chooses to retire. If an employee chooses to work beyond 65 the employer must ensure that they facilitate this and not show any signs of discrimination against older employees, which could be interpreted if the employer put pressure on the employee to retire.
  • The Equality Act 2010 legally protects people from discrimination in the workplace and in wider society. It is against the law to discriminate against anyone because of their age in the workplace.
  • It is likely that a number of older people in the workplace will increase in the future due to increasing numbers of workers who do not have pensions. As such, employers will need to prepare for a more diverse workforce and to cater for the needs of an ageing workforce. It is thought that workplaces will soon be made up of at least three generations, yet I recommend that employers now begin planning for this diverse workforce.
  • Over the next few years all employers will have to provide workers with a workplace pension scheme by law. Employers must enrol all workers who:
  • Are aged between 22 and state pension age
  • Earn at least £10,000 a year
  • Work in the UK