Firms' motives to offer pensions lost on workers

Research by consultant Hymans Robertson highlights that more than half of finance and HR directors in Britain’s largest companies say they run DC schemes to help employees retire on a good income. By contrast, only 19 per cent of consumers believe this is true.

The report says the benefits of a DC scheme for recruitment, retention and tax efficiency are the top three reasons consumers think companies run schemes.

While company directors believe in running a scheme to help members save for retirement, consumers disagree: less than a quarter (24 per cent) think contributions paid by companies are high enough to secure a decent retirement income.

A lack of belief and engagement with DC pensions among workers is causing leading companies to question whether further investment in their DC schemes is worthwhile.

Lee Hollingworth, head of DC at Hymans Robertson, said: “DC pensions have become more about providing the opportunity to save for retirement rather than providing a structure aimed at delivering a good outcome. While many companies now see their only duty as being to provide a vehicle for this kind of saving, consumers clearly expect more from their employers.

“With almost a quarter of employees stating they will be reliant on a company pension in retirement, and auto-enrolment on the horizon, it is essential consumers and employers start working together now to avoid creating a generation of DC members unable to retire.”