Employers are failing to confirm whether their workplace pension schemes are offering value for money, according to the Chartered Institute of Personnel and Development (CIPD).
An analysis of the professional body for HR’s Spring Labour Market Outlook 2023 figures found that fewer than three in 10 (29%) of organisations which have a defined contribution (DC) provision check if it is delivering a good return on investment (ROI) for staff every one to three years.
In the same period, the assessment revealed that of the 1,349 using a DC plan as the main workplace pension scheme, only just over a quarter (27%) examine whether it’s providing value for money for the employer.
Additionally, a third of HR professionals surveyed were not aware if the ROI their DC scheme had ever been checked, either from an employee (30%) or employer (33%) perspective.
Among those polled, the remaining respondents said the value for money provided by their provision was reviewed every four to six years (9%), every seven or more years (3%), or “as and when” (17%).
The research further found that 12% of employers hadn’t checked the return of their scheme at all and did not plan on doing so. In the private sector, small- and medium-sized businesses were most likely to say this compared to larger ones, 21% versus 5% respectively.
Among all sizes of organisations in all sectors, those without a financial wellbeing policy were more likely to admit this than those with one, 20% compared to 5% respectively.
Charles Cotton, senior reward adviser at CIPD, said: “Given the amount of money being spent by employers and employees on their workplace pension, you might have expected most organisations to carry out regular reviews to check whether such schemes are delivering value for money, for scheme members, and for the employer.”
The CIPD recommends that HR professionals regularly check the value their provision is providing for both employers and employees. It proposes they review member communication and support, fees and charges, fund performance, flexibility and choice, and the workplace impact.
Cotton added: “The fact that so few employers regularly review their DC plans suggests the current model is failing and we’ll eventually see legislation requiring workplaces to carry out such reviews on a regular basis.”