Key points include:

Russell Agius, consultant at Hewitt Associates said:

The UK faces a £1.2 trillion shortfall between pension expectations and reality: Individuals need to accept the need for compromise

• Based on data from a survey of 2,000 people over the age of 18 conducted by YouGov, Hewitt has calculated the gap between current behaviour and the likely reality as £1.2 trillion – equivalent to 80% of the UK's GDP in 2008. 
• On an individual basis, the current reality gap equates to £50,000 per person of working age, equivalent to two years of gross salary for a worker on the UK average salary of £25,000 (based on 2009 Annual Survey of Hours and Earnings, Office for National Statistics). 
• Gap between individuals' expectations and reality of retirement income increased by 50% since 2004.
• 85% of respondents do not fully understand what retirement income they are entitled to from the state.   
• Individuals need to accept a combination of working longer, saving more and receiving less in retirement.

Hewitt Associates welcomes the changes, but recognises an older workforce creates several potential issues including

• Benefit packages may need to be re-visited to fully adapt them to older workforce's needs, for example medical insurance becoming more important than childcare vouchers.  
• Succession planning will be another growing concern for companies to look into in the coming year

Hewitt Associates comments on the impact of NEST and auto-enrolment 
Andrew Cheseldine, pension consultant at Hewitt Associates said:

"NEST was probably the right answer to the question that the previous Government posed - how best to implement automatic enrolment into workplace pensions. However, over the past six years there have been several new factors which need to be addressed, including the credit crunch, further increases in life expectancy and changes to the state retirement age.

"Potential changes following the review may include:

• Introducing a minimum number of employees that would trigger auto-enrolment requirements for members. Under the existing plans Hewitt believes the 'pool' of employers could number over two million when charities and private employers (e.g. those of the 110,000 nannies who worked in the UK last year) are included.  If the rules are amended only to include employers with more than 20 employees, providers would only need to deal with about 90,000 employers (although these would account for approximately 14 million employees).
• Introducing a waiting period, thus significantly reducing potential administration costs in respect of short term workers. 
• Changing the definition of earnings to one that is less likely to cause employers administrative issues.

"As a result of the review, we may see that mainstream providers, such as larger insurance companies, will be keener to offer products in this area.

"Given it will then take time for consultation to be conducted and proposals published, the existing timetable for NEST implementation looks difficult to achieve. As a result, we are recommending that companies should not over-commit resources to potential solutions until there is greater clarity from the Government on this important issue."

About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organisations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt works with companies to design, implement, communicate, and administer a wide range of human resources, retirement, investment management, health care, compensation, and talent management strategies. With a history of exceptional client service since 1940, Hewitt has offices in more than 30 countries and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visitwww.hewitt.com.

Sarah Decottegnie,  Capital MS&L,  020 7255 5197
Colin Mayes,  Hewitt Associates,  +44 (0) 1372 733 689