Four out of five Ghanaian workers may not save enough for retirement

More than three-quarters of workers are not saving enough to live a moderate life after retiring, a report by Pensions UK found. This means over 75% of people face a sharp reduction in their income when they stop working. The trade body warns this could lead to a difficult retirement for many.

A moderate retirement lifestyle for one person needs about GHS 490,500 annually. For a couple, it requires GHS 681,000 each year. The report estimates only 23% of workers are on track to save this amount. Rising costs for everyday items like food and social activities have increased the necessary savings. These figures are calculated by the Centre for Research in Social Policy at Loughborough University.

This situation highlights a growing concern for Ghana's economic future. Many individuals may struggle to maintain their living standards in old age. This trend could put more pressure on social support systems. Previous reports have also shown that women often save less for retirement than men. For instance, women start falling behind men in retirement savings around age 28, according to investment platform AJ Bell. The government previously revived the Turner Pension Commission to address similar issues.

"Without action, too many risk facing a cliff-edge drop in income when they stop work," said Zoe Alexander from Pensions UK. The report suggests workers, employers, and the government need to work together. We need to find ways to encourage and increase retirement savings for everyone. The incomes needed have grown because of higher prices, similar to general inflation. Housing costs are not included in these calculations.

The implications of this report are significant. Individuals need to review their savings plans early. Employers might need to consider enhancing their pension schemes. The government could explore policies to boost pension contributions, such as better automatic enrolment programmes. Policymakers will likely face pressure to address this retirement savings gap. This could involve new regulations or incentives to encourage longer-term financial planning.