Provided by Mercer: 8/10/08
Recent financial market turmoil has left employees uncertain whether they can afford to retire and, while they are looking to their employers for advice and assistance, many employers are failing to deliver, Mercer’s 2008 Benefits Outside the Square Study has found.
- Over 40% of employees aged 50 and over are unsure how much they will need in retirement
- One in four expect to delay retirement until their 70s
- Baby boomers want their employers to help them access financial advice and education
- Employers recognise the benefits of doing so – but less than one-third are actually doing anything
Mercer’s study of 600 working Australians and 150 employers, found that more than 40 per cent of employees aged 50 and over are unsure how much they will need in retirement, and one in four expect to delay retirement until their 70s.
“For many baby boomers, the impact of recent stock market declines on their superannuation savings means that traditional retirement is not an option - they just can’t afford to stop working altogether,” David Anderson, Asia Pacific Business Leader of Mercer’s outsourcing business, said.
“Instead, they’re looking to their employer for practical help in preparing for and transitioning to retirement – and for employers that means facilitating financial advice and education as well as flexible working arrangements. It’s no longer enough for employers to just pay a salary and provide traditional benefits,” he said.
Mercer’s 2008 Benefits Outside the Square Study found nearly 50 per cent of employees aged 50 and over were dissatisfied with the benefits on offer to them, making them the employee demographic most unhappy.
When these employees were asked how their employers could best help them prepare for retirement, financial advice, guidance and education topped the list. Illustrating the value of these benefits, 74 per cent of those who had seen a financial adviser had an idea how much they would need in retirement but only 48 per cent who hadn’t seen an adviser said the same.
Mr Anderson said while employers recognise the value of helping employees prepare for and transition to retirement, less than one in three (28%) are actually doing anything about it.
Another major disconnect identified in Mercer’s 2008 Benefits Outside the Square Study is the lack of discussion between employees and employers on succession planning.
“Employees are looking for ways to reduce the number of hours they work while continuing to receive an income. At the same time, employers are competing for talented people in a tight labour market. However, the two drivers have not yet converged in the workplace with the vast majority (86%) of employees aged 50 and over having not yet discussed succession planning with their employer,” Mr Anderson said.
Mercer believes its study has discovered a number of great opportunities for employers to use employee benefits to their advantage, considering current labour market challenges.
"In a tight labour market the right mix of benefits can help attract and retain talented people. Mercer’s 2008 Benefits Outside the Square Study found 80 per cent of working Australians - but only 55 per cent of employers - see employee benefits as an important consideration when joining an organisation," Mr Anderson said.
Mr Anderson said employers need to speak to their workforce about the benefits they want and then deliver them. In the case of the baby boomers, who make up an increasingly key part of the workforce, benefits such as financial advice and flexible working arrangements will keep them in the workforce longer.
“Improving the financial literacy of employees of all ages can meaningfully improve the productivity and the longevity of a workforce,” Mr Anderson said.
“All too often, personal problems such as financial issues have a serious knock-on effect in the workplace.
“Rather than focusing on incremental pay increases, employers should consider a more strategic solution - encouraging employees, from the earliest possible age, to start planning their financial futures,” he said.
Download Study
2008 Benefits Outside the Square Study (2.39MB)
Previous issues:
2005 Benefits Outside the Square Study (1.65MB)
2001 Benefits Outside the Square Study (579K)
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For queries about the study, please contact:
Elyssia Silberstein
Research Manager Australia/New Zealand - Mercer
T: 03 9623 5981
E: elyssia.silberstein@mercer.com
For media enquiries, please contact:
Megan Burges
Media and Communications Consultant - Mercer
T: 03 9623 5754
E: megan.burges@mercer.com
This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any investment decision.
