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Employers looking to attract and retain the best and brightest may still need to consider improving their pension package.

Pensions Are Still The Most Important Employee Benefit

The introduction of Auto-Enrolment to ensure all employers provide a pension scheme for eligible employees has been dubbed by most as an unqualified success and should go at least some way to close the ‘savings gap’- the difference between what most employees are paid in their current roles, and their existing state pension and savings provision in retirement.

However, the ‘gap’ between what is needed and wanted is still massive and it is very likely that the UK will follow other countries in terms of compulsory pensions and enforce more increases to Employer and Employee contributions in the future. As many Directors are still treated ‘employees’, it is relevant to consider the impact on all levels of staffing within a company.

Most employers will be relieved to have overcome the current legislative hurdle and feel that their duties are complete. However, employers looking to attract and retain the best and brightest may still need to consider improving their pension package, by offering greater levels of employer contributions than the statutory minimums for particular staff, senior management and Directors. Hearteningly, research has shown that more than three quarters of Employer respondents believe workplace pensions are an important employee benefit and that two-thirds would be happy to allow staff to increase their own pension contributions each year.   

In a recent survey of 500 UK Employees by Jobsite, 68% of respondents would be concerned about taking a new job that didn’t offer a decent pension scheme. This theme is likely to continue over the coming years as “younger” staff do not wish to work until their new State Pension Age of at least 68 and want to save more so that they can retire prior to that time.   

The increasing State Pension Age is likely to be another reason that the typically most sought-after employee benefit (Private Medical Insurance) is now ‘neck and neck’ with a good pension scheme in terms of what employees require as part of their benefits package.       

It is evident that employers need to be mindful of offering a competitive pension scheme where possible and the option of offering higher or matching pension contributions to a certain level, can drive employee loyalty and an understanding of their benefits. Despite all this, employers tend to under-promote their pension scheme to prospective employees. This is particularly evident with the small to medium sized companies where pensions are less well promoted when recruiting staff than by larger firms. It would seem to be a missed opportunity to demonstrate the value of what is being provided for staff.

An Independent Financial Adviser can assist in promoting the benefits of your pension scheme to staff to drive engagement, by providing member surgeries for staff to discuss their levels of contributions and fund selection. Don’t forget, the employer arranged pension advice allowance, has been increased up to £500, allowing the employer to fund a level of financial advice without creating a benefit in kind tax issue for the employee.

For Independent advice on making the most of your pension scheme, call us on 01473 408422.

To view or download our Corporate Advice, which includes information relating to pensions and employee benefits, please click here