Chris Murray looks at how employers can use better communication and online technology to help employees recognise the value of their company-sponsored pensions.
Every year, UK employers pay millions of pounds in pension contributions, yet much of the workforce is oblivious to the real value of the pension funds generated on their behalf. It’s hardly surprising then that these employees are not as appreciative as their employers might hope and that these contributions often have little impact on recruitment and retention.
At a time when large numbers of final salary pension schemes are being closed to new entrants and, ultimately, to future benefit accrual, it is little wonder that any changes connected with pensions are generally viewed with suspicion. Even good money purchase schemes, whether occupational or group personal pensions, are often unappreciated – unless employers have communicated the benefits properly.
Say it loud
Quite simply, if you want your employees to appreciate what you are providing by way of pensions or other benefits, you need to tell them.
It’s all very well holding presentations at the time of major changes, such as replacing a good final salary scheme with a (potentially not so good) money purchase scheme, but this is only part of the solution. A year or two down the line, employees will have forgotten the presentations but may, if they are lucky, be receiving two lots of benefit statements: one from the original scheme (of which they have become a deferred member) and one from the replacement scheme. There is still no requirement to produce annual statements for deferred members of final salary schemes and, even if they are produced, they may well appear at different times of the year to the replacement scheme.
Use the technology
It doesn’t have to be like this. We live in an internet-driven world, so why not take advantage of it to get the message across? Systems exist for aggregating benefits under different schemes so that employees can see their potential pension income at the click of a mouse.
But why stop there? Why not include the basic state pension and other benefits from previous employers? People can carry out their own ‘what if ’ projections, such as ‘what if I retire early?’ or ‘what if I pay more?’. Suddenly, your employees have a valuable tool and their suspicions regarding pensions will (hopefully) evaporate. In addition, you will have created something that people really value.
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