Workers yearn for employer guidance on pensions but still lack understanding, leading some experts to call for the government and pensions industry to help employers use their influential position to promote saving.
How to engage savers with their pension is a source of perennial debate among the pensions industry, with schemes trying face-to-face meetings, restaurant discount offers and even rebranding exercises in an effort to pull in members.
What came across loud and clear was the desire of employees to get help from their employer
Robin Hames, Capita Employee Benefits
Research from provider Fidelity Worldwide Investment released last week – which surveyed 2,000 adults with more than £10,000 of investible assets and 500 with less than £10,000 – found 59 per cent of employees said their employers’ contributions to their pension were an “influential” or “extremely influential” factor in their pension saving.
The study also found the ‘nudge’ factor in saving was important, with 55 per cent saying contributions being deducted automatically was influential or extremely influential.
Richard Parkin, head of retirement at Fidelity Worldwide Investment, said: “While employers play a huge part in persuading people to save for the long term, with the advent of auto-enrolment and workplace contributions, we can’t expect this to be the sole driving factor.
"The government has a part to play also to ensure tax relief benefits continue to encourage employers to support retirement savings.”
Source: Capita Employee Insight Report 2015
He added: “We, as an industry, need to work together to ensure the system works, grow retirement savings and make sure any changes to the rules in the future are sustainable for the long term.”
The government is currently carrying out its consultation on how to incentivise pensions saving, and has proposed moving the tax treatment of pensions from exempt at the point of contribution and taxed on withdrawal to taxed on contribution and exempt at withdrawal.
However, a spokesperson for mastertrust The People’s Pension said: “We know that tax relief in itself is not an incentive to save. If it was, auto-enrolment wouldn’t have been so critical in getting people to pay attention to saving for later life.
"Part of the problem is that tax relief is so poorly understood.”
Lack of understanding
This knowledge gap was compounded by data released this week by investment platform provider Hargreaves Lansdown, looking at 635 investors who had auto-enrolled through the platform.
The data showed just one in three members of auto-enrolment schemes were aware of their retirement options.
In addition, three-quarters did not know when they would retire and more than half did not know where they were invested.
Robin Hames, head of marketing and research for consultancy Capita Employee Benefits, said his own company’s research into employee attitudes highlighted a need for employers to engage with their workforce.
“What came across loud and clear was the desire of employees to get help from their employer,” he said. “They definitely see them as trusted support.”
In the company’s most recent employer insight report, 54.7 per cent of respondents said they wanted to receive general financial education, while 64.6 per cent wanted guidance.
Role of the industry
Hames added the industry should seek to help employers by providing insight into areas such as membership analysis.
This, he said, would enable employers to segment their employee population into cohorts that could be evaluated on a more granular level. “The workforce is not an amorphous body,” he said.
He added employers should treat employees like customers when attempting to drive engagement, persevering to find solutions that work.
“You wouldn’t use a single approach to your customers,” he said.
