The most influential factor for organisations in choosing a workplace pension provider is convenience, according to the latest annual employer survey by the Department for Work and Pensions (DWP).
In the study, which surveyed 8,002 employers in Great Britain last year, 48% of respondents cited ease or convenience of the provider or scheme(s) when asked what they took into consideration when selecting a pension provider for their employees.
The second most common answer was advice from a professional body, colleagues or fellow employers (44%), followed by fees or costs to the employer (36%) and value for members/employees (36%). However, nearly one in five (18%) said they didn’t know.
When asked about switching pension provider, more than three in four (77%) said they hadn’t switched or thought about switching, while almost one in 10 (9%) had switched or thought about it. Employers that had switched pension provider cited a range of reasons, the most common being advice from a professional body, colleagues or fellow employers (36%), value for members/employees (35%), value for money for the employer (33%), and the fees or costs to the employer (31%).
Four in 10 (42%) of those polled said they offered a defined contribution scheme to new employees, while very few (4%) offered a defined benefit scheme. Around one in five (18%) employers said they do not offer any pension scheme to new employees and three in 10 (30%) didn’t know.
Gail Izat, managing director for workplace at Standard Life, believes the figures are a cause for concern.
She said: “Despite the introduction of auto-enrolment in 2012 meaning all employers have to offer a pension to entitled workers, 18% of employers surveyed said they don’t offer their employees a workplace pension and 30% said they didn’t know. While some respondents could be sole traders, this means almost half of employers are unaware of the pension offering and are likely relying on support from payroll suppliers and others to manage contributions on their behalf.”
Izat also believes that the survey results suggest pensions are slipping down the priority list for employers.
She said: “It’s understandable that short-term concerns have outweighed longer-term priorities in recent years, with just keeping the lights on a challenge for a huge number of businesses. However, financially healthy employees are crucial to the success of any business, and pension saving forms an important part of this.
“Government and providers both have a big role to play in ensuring pensions are as easy as possible for overworked employers to understand and engage with,” Izat added.