Could pensions be the best recruitment tool?

The life office analysed the long-term impact of different employer pension packages on retirement outcomes.

It found that someone who that began working full-time at a company with a salary of £25,000 per year and paid the standard monthly auto-enrolment contributions of five per cent employee, three per cent employer from age of 22, would amass a total retirement fund of £459,000 at the age of 66, not taking inflation into account.

If they were to join a company on the same salary but with a more generous company pension scheme that paid an additional two per cent from the age of 22, they would accumulate £574,000 by the age of 66, £115,000 more than the standard contributions would achieve.

Standard Life found that if a company was to contribute even more, for example an additional five per cent, so five per cent employee, eight per cent employer - from the age of 22, a pension pot of £747,000 would be achieved – £288,000 more than standard.

Pensions as important as salaries?

Dean Butler, managing director for customer at Standard Life said: “Our analysis shows that even a small increase in monthly pension contributions can have an extremely significant impact over the course of a career.

“For example, if someone had two different jobs offers that pay the same salary, but one offer includes a pension package that pays just two per cent more in pension contributions, the bigger impact it could have over time.

“Of course, there are many factors to take into account when accepting a job offer, including salary, but the full benefits package should be considered as part of the decision-making process. It’s worth taking time to understanding the short- and long-term impact on both your monthly income and pension savings, so you can weigh up what’s best for your individual circumstances.”

Rob Heath, director at Net-Worth NTWRK said pensions should be used as much as salaries in the recruitment process.

He said: "t’s an absolute ‘no brainer’. If someone had told me at 19, what I now know about later life planning, I reckon I would have slightly less grey hair. All employers, in my opinion, have a duty to ‘educate’ their employees about the long-term benefits of pension planning, along with the attractive tax benefits they offer, especially in our younger generation. "In the US it’s a deal breaker if an employer does not offer ‘Healthcare Insurance’ due to the value it offers…to me the benefit of being enrolled early into an attractive company pension scheme carries the same weight."