UK firms that take an active role in engaging their employees with pensions are reaping the rewards through stronger financial results.
This was a key finding in the report, ‘Retirement Realities: Unlocking the Workplace Benefits’, from pension provider Scottish Widows.
Research outlined in the report reveals that two-thirds (64 percent) of UK businesses that actively educate staff on pensions report ‘very good’ financial performance. Among employers that fail to promote pension engagement 18 percent describe their performance as just ‘okay’.
Generosity and profitability
The research, conducted by Opinium with 1,000 senior decision makers responsible for pensions and 2,000 employees, points to a link between pension generosity and profitability.
More than two in five (41 percent) businesses that contribute over 8 percent into an employee’s pension by default report ‘very good’ financial performance. By contrast, only 11 percent of high-performing firms offer the minimum 3 percent contribution required under automatic enrolment.
Graeme Bold, managing director, workplace and intermediary wealth at Scottish Widows, said: “Workplace pensions are a powerful, yet often overlooked way to shape employees’ long-term financial wellbeing.
“Our data shows that by investing in pension engagement, employers are not only supporting their employees’ future, but also unlocking stronger financial performance today. This helps to set the foundations for an engaged and productive workforce, which attracts and retains top talent.”
Broader benefits
This positive impact can be seen as a result of other employee benefits too, researchers said.
Firms offering enhanced non-pension benefits are also more likely to report strong results. More than half (51 percent) of organisations providing healthcare, 48 percent offering extended maternity leave and 39 percent offering paternity leave above the statutory minimum report the best financial outcomes, researchers found.
Retention and recruitment
The findings underline the growing importance of pension provision in attracting and keeping talent.
Nearly nine in ten (88 percent) employers believe pension-related benefits and support are important to their company’s financial performance, and 91 percent say they are vital for recruitment and retention.
However, poor communication and limited accessibility are driving dissatisfaction. While most employees are happy with their workplace pension, nearly a third (29 percent) have already left or are considering leaving their job due to concerns about competitiveness. Of those dissatisfied, 68 percent cited a lack of competitive pension offerings, 26 percent pointed to low levels of communication, and 21 percent said benefits were difficult to access.
Evergreen engagement
Bold added that sustained engagement is essential.
“At the moment we’re in the middle of the industry-led Pension Attention campaign, which is a great opportunity to put pensions at the top of the discussion agenda. But pension engagement is evergreen, so it’s important companies actively discuss their employees’ benefits package all year round. Technology has made this far simpler and it’s becoming increasingly easier to engage with your pension through an app.”
He said: “Our Scottish Widows app gives members of our workplace schemes access to all of their pensions and investments in one place, along with tools, support and other products to help them protect their future. This helps employers enable their employees to check 24/7 that they’re on course for their desired lifestyle and put retirement planning at their fingertips.”
