While these workers face many challenging questions, not least how to cope with the pandemic, our recent research highlights a worrying lack of long-term support in the workplace for this group.
We surveyed more than 300 businesses and found that 61% do not provide any pre-retirement or financial guidance to employees approaching the age when they can access their pension pots (55+) – leaving many in the dark when it comes to planning their financial futures.
This is despite the fact that eight out of 10 employers said their company and staff would benefit from being better informed about all things financial, with retirement planning topping the list of what employers think would be most valuable to their staff.
Other research from The Institute for Fiscal Studies revealed that one in eight older workers have changed their retirement plans due to the Coronavirus, with a third now in a worse financial situation than before. Some 8% of older workers have pushed back retirement.
The financial plans of many over 50s have been disrupted this year but it's encouraging that Financial Planners and Paraplanners have not overlooked their needs, given they are largely at the centre of what we do.
As Financial Planners, we know we add value across many areas of financial education and guidance but we need to do more to combat the perception that the value we offer the quality of our advice is not always broadly understood.
Our survey found that although 63% of employers say they are not averse to the idea of using an external financial adviser to offer employees financial support, 37% had concerns over cost, were worried about regulation or simply did not see this as a responsibility for an employer.
As a profession, we can do much more to help those who feel that financial guidance and advice is out of their reach by bringing money matters and financial education closer to home via webinars and Teams/Zoom calls in the workplace (or, more likely, talking to people at home).
We find there is a real thirst for even basic knowledge about budgeting and saving, using tax allowances and general financial literacy. Add this reality to the ongoing financial undertow created by this pandemic and it increasingly means employers will be on the look-out for help for their people.
But they will hesitate to reach out unless we make a better case to support them. We owe it to ourselves to engage with the many who do not regularly speak to a Financial Planner for fear of the cost or because they do not (yet) see the value in the advice we can give.
Those firms who demonstrate collaboration between non-regulated colleagues, who consult on workplace pension schemes, with regulated colleagues who give guidance and advice to their members, will thrive.
As our survey found, there is visible demand from employers to support their employees in the journey to and through retirement with education, guidance, and advice.
And it’s not just our research which points to this. The Financial Conduct Authority found that only four in 10 people actually took advice before accessing their pension for the first time.
Combine this with further findings that 42% of withdrawals from pensions over the last year were, on average, at an annual rate of 8% or more. Set this against a broadly agreed benchmark that 4% is the maximum sustainable rate if savings are to be replenished and it conjures up a worrying picture.
To give people the chance of a better retirement, we, as an industry, need to be bolder to prevent them draining their savings before they even become pensioners.
Peter Selby is managing director of retail advice at Punter Southall Aspire, a Financial Planning and retirement savings business.
https://www.puntersouthall.com/