Pension planning: Is it ever too soon?

Many employees are not paying into a pension or doing any other retirement planning because they do not know when is 'the right age' to start.

According to new research from the Institute for Employment Studies, there is much confusion amongst UK employees about when they should start planning for their retirement – so rather than being prepared, they continue to wait for the 'right time'.

The report – 'Should I Stay, Or Should I Go?' – highlights the various potential obstacles faced by employees, including opening a dialogue about pensions and retirement planning with their employer.

Consequently, many people are not starting to plan for the future soon enough, and there are other factors which can influence people's approach to preparing for retirement, including health, family, and their financial and employment status.

These conditions, the study found, are "key to people deciding that they ought to plan in the first place."

The report describes how the recession and economic climate have impacted on the retirement landscape, forcing many to stay in work longer than they might have done in order to pay the bills, whilst seeing others forced into retirement or made redundant as part of employers' cost cutting measures.

Commenting on the findings, Marie Strebler, associate fellow at the Institute for Employment Studies and one of the authors of the report, said: "Employers seem to be stuck in reactive mode. They provide retirement support, however they are failing to encourage people to stay."

This is the first recession in which people are able to make claims of age discrimination, the report says, but Ms Strebler explained that "Negative attitudes and stereotypes in the workplace have not necessarily disappeared with the advent of age discrimination laws," because of the other consequences brought on by the financial crisis.

"In tougher times there is a risk that cuts will have an adverse and disproportionate impact on older workers. Ageist stereotyping is potentially the most common form of prejudice experienced by individuals, given that 'old age' comes eventually to every living person," she said.

The report revealed that the majority of older employees are unsure of the processes involved in planning for their financial future, and many wish that they had started seeking retirement advice at a younger age.

© Fair Investment Company Ltd