Bridging the Retirement Gap: why a strong workplace pension matters

Despite a growing desire to retire earlier, many people expect they’ll need to work longer than they'd like. In 2024, according to research conducted by Standard Life, the average desired retirement age is 62, yet most anticipate retiring at 66. This is a slight improvement from 2023, but still revealing a persistent gap between aspiration and reality.

This disconnect is most pronounced among those without financial planning support, who foresee working until 70 — seven years beyond their ideal. Women, Gen Xers, Millennials, and Gen Zers all show significant disparities between when they hope to retire and when they believe they can. 

These findings highlight the critical role of a well-structured workplace pension. With the right guidance and scheme in place, businesses can empower employees to retire with confidence — and help close the gap between dreams and expectations.

Despite the growing need for stronger retirement support, 4 in 10 employees still work for employers offering only the minimum 3% pension contribution across the board. This widespread reliance on the statutory minimum highlights a missed opportunity: by going beyond the baseline, employers can significantly improve financial wellbeing, boost retention, and help close the gap between retirement aspirations and reality. 

However, rule complexity and lack of knowledge remains a key barrier. When it comes to setting pension contribution levels, legal compliance remains the dominant influence. According to research conducted by NEST, over half of all employers (54%) cite it as a key factor — and for smaller employers, it’s by far the most important consideration. 

While meeting statutory obligations is essential, this compliance-first mindset often results in contributions that hover at the minimum threshold. It suggests that many employers view pensions as a box-ticking exercise rather than a strategic tool for employee wellbeing and retention.

Interestingly, larger companies are significantly more likely to go beyond the statutory minimum when it comes to pension contributions for employees. Around half (51%) of large employers offer more than 3% to all their employees — compared to just 25% of small organisations.

This disparity underscores a key challenge for SMEs: balancing compliance with competitiveness. While smaller businesses may feel constrained by cost, enhancing pension contributions can be a powerful lever for attracting and retaining talent — especially in a market where employees are increasingly focused on long-term financial security.

In today’s job market, a strong workplace pension involves more than simply increasing contribution levels. Enhancing a pension offering can also include providing clear communication, access to financial education, and flexible options that help employees make informed decisions. For organisations of all sizes, taking a broader approach to pension provision can better support employees in planning for retirement and help narrow the gap between their expectations and reality.