Only a quarter of UK employers think the defined contribution (DC) pension provision they offer employees is adequate, enabling them to have a comfortable retirement.
WTW’s annual DC Pensions & Savings report found that 82% say they want to do more with their DC plan than just meet compliance or be similar to other employers.
Half of UK employers (51%) surveyed want to address pensions adequacy in the next two years. In order to do this, half of employers are now monitoring retirement adequacy as part of their pension plan design, up from one third in 2015.
Separate WTW research this year shows that employees are also concerned about their retirement savings. The Global Benefits Attitudes Study found that 31% do not now think they will be able to retire before they are 70 – up from 16% in 2019.
Only 56% of employees surveyed are confident about their retirement and 79% acknowledge that they are under-saving for retirement.
WTW has previously called for employers to automatically enrol new employees at the highest matching contribution level in their scheme to significantly improve retirement savings. However, in reality, most employers (86%) with matching contribution schemes auto-enrol employees at the minimum contribution level.
Helen Holman, head of DC consulting at WTW, said: “The focus on retirement adequacy is increasing, as more employers are looking to expand support for employee decision-making and financial wellbeing. Employers are taking various actions to address adequacy, including enhancing guidance services, improving investment strategies, and analysing retirement outcomes for different groups.
“However, despite these growing concerns, few employers have secured additional funding to improve plan generosity, highlighting the need for better investment efficiency and targeted communication.”
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