Firms failing to protect staff from pension scams

Cost, employee engagement, and expertise are holding employers back from providing financial guidance for employees, despite awareness of its importance

Almost two-thirds (62%) of employers have failed to raise any awareness among employees about safeguarding against pension scams, according to research from Barnett Waddingham.

The research found that 28% of organisations have no plans to look into providing awareness campaigns, despite 19% admitting that their organisation is aware of at least one of its employees having fallen victim to a scam.

These findings come after ActionFraud revealed that 253 pension scam victims reported a total loss of £23 million in 2017, equal to an average of £91,000 each.

In terms of wider financial support for employees, 60% of employers don’t provide any financial education or guidance, with 18% not considering implementing any. Additionally, 49% of employers have no form of defined financial wellbeing strategy that includes the provision of financial benefits other than a pension. And 28% have no plans to introduce one.

However, employers were found to care about financial wellbeing, with 88% saying that as an organisation they are concerned about the financial issues of their employees, and 84% agreeing there is a need for financial guidance for staff.

Speaking at a roundtable outlining the research, partner of workplace health and wealth at Barnett Waddingham, Paul Leandro said this shows employers “recognise that there is a problem but are finding it hard to solve”.

He pointed to three key obstacles employers face that are preventing them from providing wider financial wellbeing provision: cost, employee engagement, and expertise.

The report also found that despite good intentions, most employers are making assumptions about their employees’ financial literacy, with almost two-thirds (63%) admitting they haven’t actually tested this.

Leandro said this is a risky approach to take. “What we’ve seen from the organisations we talk to is that there is no initial analysis on the workforce or dialogue with employees on what they need, so when we ask why they’ve put in place what they have many say ‘I don’t know’."

Also speaking at the roundtable, group head of pensions at National Grid John Chilman encouraged employers to “take a holistic view” or “analysis” of the needs of their employees first to make sure any financial wellbeing strategy implemented is valuable to that particular workforce.

“Employers have got to understand their own workforce,” he said, adding that HR faces the challenge of getting the financial wellbeing agenda recognised at the top table. “One of the big challenges is how to make a business case for it when it’s hard to see tangibly what the payback is,” he said.

Pointing to the research's finding that 74% of employers are now paying more than the statutory minimum contribution to some or all of their employees’ pensions – and that the top reasons for doing so were to reward employees, to retain them and to help people retire when they’re ready – Chilman spoke of the need for employers to be more forward-looking.

“If they don’t then it will become an HR issue in 20 or 30 years’ time when it’s time for some of the workforce to leave but they can’t afford to as they haven’t got the finances to retire,” he said.

“Because there’s been no more policy changes, employers are now looking to address the issue over the long term,” added Leandro. “In the past two years [of the survey] keeping up with regulation was a key driver, but now the number one objective for providing pensions is to reward employees.”

The research also looked at financial fairness within organisations. It found that 62% of employers do not believe a gender pay gap exists in their workforce, despite 78% of all UK organisations that published their gender pay gaps in April reporting a gap in favour of men.

Employers and employees were found to have different perceptions of financial fairness; 70% of employers believe that the success of the organisation is shared fairly, while just 15% of employees (surveyed for research earlier this year) think this is the case. A similar disparity is seen on transparency, with 68% of employers agreeing that their organisations are open and transparent about remuneration – more than double the proportion of employees (32%) that agreed with the statement.

Barnett Waddingham surveyed 243 UK organisations (including 200 anonymous organisations) representing UK plc and the public sector, and 43 of the firm’s clients, in July 2018.