Does a good pension scheme improve recruitment and retention?

Planned rises in auto-enrolment minimum contributions this year and in 2019 mean that pensions engagement is more important than ever. Successfully communicating the importance of saving into a pension could prevent opt-outs, and even encourage people to save more.

Do pensions attract and retain employees?

Recently published research suggests that many employees already recognise the value of saving into a pension scheme – so much so that it is positively affecting recruitment and employee retention.

More than ever before people are asking about pension provision before they accept an offer

Caroline Roberts, VisitBritain

Provider Aegon and the Confederation of British Industry surveyed 189 participants from a mix of small to large businesses and across all industry sectors. They also conducted 15 interviews with participants from a range of business sizes and sectors.

Sixty-three per cent of respondents had defined contribution schemes only, 6 per cent had defined benefit schemes only, 30 per cent had both, and 4 per cent had DB/DC hybrids.

Forty-two per cent of businesses reported that their ability to recruit has been improved by their pension scheme. The same percentage of firms also said that pension provision has a positive impact on employee retention.

Thirty-six per cent of participants believe that better employee engagement with pensions will improve the ability to recruit.

Paul Bucksey, managing director at Aegon Workplace Investing, said that while pensions used to be seen as “quite useful” for recruiting and retaining staff, many people would say that this is now no longer the case.

However, he said the survey showed that the employers who participated still believe that pensions play an important role in employee loyalty and recruitment.

Engagement remains low

The study found that only 12 per cent of businesses surveyed are happy with current levels of employee pensions engagement.

“Whilst [there is] an engagement issue, the good news is that people are taking notice of the pensions offer when they are considering job offers, or indeed thinking about leaving their current employer,” said Bucksey.

Source: CBI/Aegon

Pensions engagement starts when people join a company, Bucksey said, emphasising the importance of firms “taking that opportunity to get in very early to encourage people to think about their future”.

He cited regular and personalised information, roadshows, workshops and online tools as useful ways for employers to boost pensions engagement among staff.

Pensions are 'not your main draw'

Caroline Roberts, head of people and talent at VisitBritain, agreed that “more than ever before people are asking about pension provision before they accept an offer, and HR are talking about pensions as part of a total reward package”.

However, Damian Stancombe, partner and head of workplace health and wealth at consultancy Barnett Waddingham, said the figures from the Aegon/CBI survey should be taken with a pinch of salt.

“I find them incredulously high,” he said. Stancombe said the pension often “makes little or no difference” to people when it comes to applying for jobs. “It’s a nice-to-have, [there is] no doubt about that, but actually everyone now has to have one through auto-enrolment,” he said.

Make comms meaningful

Trevor Rutter, a senior consultant at communications specialist Like Minds, was also surprised by the percentage of employers that saw their ability to recruit as improved because of their pension scheme.

He said the key to engagement is not around how people communicate, such as through roadshows or face-to-face, “it’s actually the nitty gritty of what it is they’re communicating”.

Rutter said: “Too many of us get hung up on technical details around percentages, tax relief and investments, rather than actually making it something real that someone cares about.”