Warning as four day week could cause people to lose thousands from pensions (Image: Getty)
Four-day are more possible than ever before, with nearly 200 British businesses permanently making the switch. But an extra day off at the weekend could wreak havoc on plans, according to new analysis.
Employment reforms over the last year, including under the new government, have encouraged the trend towards flexible working that was accelerated by the pandemic.
Despite the ongoing – with millions of Brits out of work and not looking for a new job – offered employees the right to request flexible working “where possible” in October, among a raft of other new employment measures.
The 4 Day Week campaign says around 200 businesses in the country now have shorter working weeks, with advocates claiming the change boosts wellbeing and morale without sacrificing productivity.
But whether the shift is an innovative new approach to timekeeping or indicative of an increasingly lazy and unmotivated workforce, it could have another unwelcome impact on pension plans.
[REPORT]
Experts have warned that switching to a shorter, four-day week could slash up to £117,000 from retirement pots.
A study from the tech firm Owl Labs found that three-quarters of British workers would be willing to give up somer of their salary for three-day weekends.
But pay cuts tied to shorter working weeks will in turn reduce the amount of money paid into pensions, with contributions based on a percentage of the worker’s salary.
It means a 30-year-old earning £50,000 a year in full-time work could lose £83,400 from their retirement funds if they began working a four-day week now and retired at 67, The Telegraph calculated.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said those considering requesting flexible work should be aware of the “huge impact” it could have in the longer-term.
Don’t miss… [REPORT] [COMMENT]
Those thinking about retirement have been urged to consider how four-day weeks could hit savings (Image: Getty)
She told the newspaper: “This doesn’t just affect your own contributions, but also those of your employer and the overall amount of investment growth those contributions generate.”
And while those in older age who have already amassed a significant amount of their pension pot may have less to worry about in terms of losing out, figures show that younger generations are more likely than their forebearers to make use of new flexible working policies.
A survey from Phoenix Group showed that over half of 18 to 34-year-olds have spoken with their boss about flexible working arrangements since the rights came into force this year.
Meanwhile, just a quarter of those aged over 55 had done the same.
In a sign of how widespread the movement has become, the union representing civil servants pressed the government last month for permission to work a four-day week, suggesting it could save over £21 million a year.
Despite campaigners insiting that the move would be “a win-win for both workers and employers”, DEFA said there were no plans for a shorter week in the civil service.
Pensions minister Emma Reynolds also , telling Times Radio that government staff “won’t get [a four-day week] because we are not living in the 1970s”.