Employers could face significant workforce and productivity challenges if they fail to address growing pension inadequacy among employees, according to a report from Hymans Robertson.

In its paper, Retirement adequacy: can employers afford not to care?, the consultancy warned that insufficient retirement savings could lead to workers delaying retirement, creating a “demographic bottleneck” and increasing financial and mental stress across the workforce.

The report highlighted that employees lacking adequate savings may remain in employment longer than planned, potentially limiting workforce progression and placing strain on both individuals and employers.

It also pointed to wider implications, including reduced productivity linked to financial stress and ongoing confusion around pensions.

Hymans Robertson suggested that upcoming developments, such as the introduction of pensions dashboards, would bring these issues into sharper focus by giving employees a clearer view of their total retirement savings.

This increased transparency is expected to drive greater demand for employer support and more competitive pension offerings.

The report also noted that workforce trends were evolving, with more individuals entering partial retirement, returning to work after retiring, or balancing employment with other responsibilities.

These shifts, it said, were making retirement patterns less predictable and adding complexity to workforce planning.

Commenting on the findings, Hymans Robertson senior actuarial consultant, Mark Stansfield, claimed retirement adequacy was already influencing employee behaviour and decision-making, warning that individuals without sufficient savings were likely to remain in work for longer than they would ideally choose.

He stressed that this created pressure not only for employees but also for employers, arguing that businesses should take a more proactive role in improving outcomes, such as reviewing pension offerings, strengthening communication, and providing greater support to help employees better understand and grow their savings.

Stansfield added that pensions were a core component of employee reward and were expected to come under greater scrutiny as transparency improved.

“We know staff care about pensions," he said. "They see the pension offer from an employer as one of the most important parts of their reward."

He noted that, as tools such as the pensions dashboard made retirement savings more visible, employees would increasingly recognise potential shortfalls, driving demand for clearer guidance and more meaningful employer support.

“If corporates do not offer this, they risk losing the trust of their staff and may find it harder to bring in new talent,” he continued.

The report also pointed to changing retirement patterns, including a rise in partial retirement and more individuals returning to work after retiring, which is making workforce planning more complex.

Stansfield said employers had an opportunity to ease financial pressures on staff by supporting more consistent and confident saving behaviours, which could ultimately benefit both employees and the business.

Indeed, the report concluded that employers who acted early - by enhancing pension provision, improving communication and offering targeted support - were likely to be better positioned for the future, while those that failed to respond risked facing growing operational and talent challenges.

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