Employees need to be incentivised to save for retirement
HR professionals have warned employers they must engage staff in saving for retirement so they don't have to work on into old age.
Speaking in the HR stream of the National Association of Pension Funds (NAPF) Conference, held in partnership with HR magazine, Simon Davies, senior employee benefits manager, Standard Life, said: "The problem with pensions is the perception is not always positive. There is a general lack of understanding and the word ‘pension’ is still a big turn -off for a lot of people.
"It is still not perceived as an issue for new people joining a company. Generation Y’s parents never had to make pensions decisions – they were in a defined benefit (DB) scheme and then they just retired."
"There is also the thought that DB is good and DC [defined benefit] is bad. DB schemes are closing and DC schemes are seen as second class," he added.
Davies claimed the complex charging structure of DC pensions and the "below standard" administration means, in many cases, individuals retire with poor annuities and the upshot is employees think they "don’t need to bother" with pension savings.
But he added: "Employees no longer face a cliff edge retirement; they will have to retire gradually and, without long-term savings, employers may have to keep them on well into old age, or pay them off.
"The shift to DC means staff need help and they are not getting that. The idea of the whole [pensions] process is to encourage savings and staff need to have a better appreciation of the money they need to put aside. The means of saving is not what excites people – they need to be incentivised by the goals of saving."
He closed by adding: "The word pension does not excite people – this needs to change."