Companies should adopt proactive policies to keep employees in work for longer, as increasing longevity places pressure on schemes, experts argue.
Speaking at the Professional Pensions' Show 2009 (IFAonline's sister title), UBS senior economic adviser George Magnus said with the changing demographic, employers should work proactively to adapt to the changing interests of employees and educate them to accumulate savings and manage retirement plans.
"The nature of the employer-employee relationship is changing and corporate paternalism is in a state of flux - companies are acknowledging it can no longer apply," he said.
Magnus explained rising life expectancy coupled with the financial crisis make defined benefit (DB) schemes untenable. For example, Magnus said in the 1950s there were around 5.5 million people over 65, which has now doubled to around 10 million.
However, he warned: "It's easy to enrol people into DC (defined contribution) schemes, but the vast majority of people don't manage their plans properly and aren't financially literate to do so."
Standard Life national employee communications manager Greg Thorley said engaging with employees is key, especially for the next generation moving into a DC environment.
He said: "You can't tell people to join a pension, you need to engage with people." He added there is now a new type of paternalism, especially for the young who communicate in a different way, through methods such as social networking.
Magnus added: "Paternalism isn't dead, but it's morphing into corporate social responsibility. "
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