Employers struggling to provide workplace pensions
Emma Greedy, March 26, 2020
Ninety-four per cent of employers have reported facing challenges when providing a workplace pension according to a study by Smarterly
Forty-five per cent of the HR professionals surveyed cited their biggest reason for worrying about their employees’ pensions is because they want to ensure staff have adequate funds when they retire.
Other key problems cited include poor service levels from pensions providers (30%) and low engagement levels from employees (34%).
More key reasons for the challenges facing include ensuring that those approaching retirement have access to adequate information (40%), dealing with higher earners with a reduced annual allowance (39%), overcomplicated administration (34%), and getting employees to contribute more than the minimum contribution level (34%).
The survey also showed that 65% of employers believe that current pension providers are not doing enough to offer new progressive products, and 63% would like to see a new disrupter or challenger move into the pension provider space.
While the annual management charge is still the number one concern for employers when it comes to choosing a scheme, employers are also looking for good communication services (37%) and online services (35%).
Given these widespread difficulties, it’s perhaps not surprising that a vast number of employers are looking to review their current pension provider in the very near future – 54% of respondents are planning to carry out a review in the next six months, while 87% expect to review their provider within the next year.
Steve Watson, head of proposition at Smarterly, said: “Pensions continue to present myriad problems for employers but the majority all link to low employee engagement levels, especially among Millennials.
“Our research shows that fewer than one in 10 Millennials are worried about their retirement savings, and 40% of employers are considering offering a workplace savings vehicle such as an ISA alongside a pension scheme to support employees’ more immediate needs, such as getting a foot on the housing ladder. A far more engaging proposition.”
However Steve Herbert, head of benefits strategy at Howden Employee Benefits, was more positive about the number of employees taking a much more active role in their pension planning.
Herbert told HR magazine: “The number of people now actively saving for their retirement has greatly increased, and this can only be a good thing as the UK looks to narrow the retirement savings gap further.
“It’s really important that employees understand how their pension plan works, and make informed and appropriate investment choices towards achieving their retirement goals and aspirations,” he added.The survey was conducted by Smarterly in 2019 and took into consideration the views from 250 HR professionals working in businesses with a workforce of 300 or more employees.