The impact of pension reforms for HR professionals
Fiona Matthews, August 05, 2015
The quality and extent of pension provision has always been an important factor for British workers when choosing a new role and organisation. It is possible we will see it become an increasingly important tool for HR professionals to attract and retain talent over the next few years.
According to Towers Watson’s latest Global Workforce Study, which examined attitudes and opinions of workers around the world, retirement benefit packages are still a key factor influencing people's decision to join a company.
The study also found that the quality of retirement benefits offered can affect many people's decision to leave an organisation. A workplace that fails to offer competitive retirement benefits may suffer a loss of talent.
Furthermore, as UK organisations compete more to attract talent in future – especially in areas with skills shortages such as engineering and IT – offering a comprehensive benefits package that includes good quality pension provision is essential.
The UK has an ageing population. Around 3.5 million Baby Boomers will reach their mid-50s within the next decade, so concerns about pension provision are certain to grow as workers currently in their 40s and 50s approach the age where they want to start changing their work-life balance.
The younger generation is showing a much greater awareness and interest in saving for the future than you might expect. The 18 to 24 age group are those that are most interested in saving according to LifeSight’s Factor 55 research. This is despite a common perception that people of this age have traditionally been more concerned with living in the moment than saving for retirement.
Perhaps the requirement to pay for education out of their own pocket combined with the austerity experienced over the last few years has created a more savings-conscious, responsible generation.
Whatever the causes, it is clear that many workers of all ages are interested in savings and retirement. The government’s introduction of pensions freedoms is designed to provide the flexibility and choice to engage workers in lifetime savings. If successful, we may see retirement provision play a more important role in people’s savings priorities as well as career choices. It is those forward-thinking employers that can cater for this growing demand that will be one step ahead in the battle to attract and retain top talent.
How should employers use pensions to attract and retain talent?
The Factor 55 research shows that the majority of UK employees have little awareness of what the new pension rules mean to them. What is also worrying is that most admit they don't talk about pensions enough and yet many would like to learn more.
This vacuum of knowledge is where employers – working closely with pension providers and other experts – can step in. By helping employees to understand the importance of saving for retirement and supporting them to make informed decisions about their options, companies can differentiate themselves as an employer of choice when it comes to pension benefits.
HR experts that provide workers with good quality, well-communicated, flexible pension schemes will attract and retain talent, reduce reputational and financial risk, and influence the public perception of their brand as a good employer. I’ve no doubt that this will help them retain the best staff in future – a significant advantage in an increasingly competitive globalised workforce and economy.
Fiona Matthews is managing director of LifeSight, Towers Watson’s master trust