The majority (90%) of UK workers say pension is the most important benefit their employer can offer, but this isn’t the same for SMEs.
Research from digital pensions platform Penfold found 50% of SME employers said a different benefit was of higher or equal importance, such as travel assistance (59%), salary advances (50%) and work socials (55%), over a pension scheme.
Pete Hykin, co-founder of Penfold, said employees are worrying about their pensions as the cost of living crisis continues.
He told HR magazine: “This financial strain is especially palpable among the younger workforce, who contend with the challenges of student debt, entry-level salaries, and the burden of exorbitant living costs.
“An increasing number of employees are struggling to allocate significant, if any, resources for their future.
“In light of these challenges, employees are growing increasingly apprehensive about sustaining their current living standards in retirement and are increasingly looking to their employers for support.”
Kate Smith, head of pensions at insurance company Aegon, said pensions have been on more employees’ minds since the introduction of auto-enrolment in 2012. This requires employees to save a minimum of 5% to receive a minimum 3% contribution from their employer.
She told HR magazine: “The world of work has changed, but so has the world of pensions with auto-enrolment meaning nearly every employee has the right to an employer pension contribution.
“However, going above the regulatory auto-enrolment minimum can help employers differentiate themselves and attract and retain staff, but also help them retire.”
More than half of SME employees (53%) reported their pension contributions were not in line with the 8% statutory minimum but said they would increase contributions if their employer matched them.
This included younger employees, as those aged between 18 – 34 would commit to an average amount of 17% if their contributions were matched by their employer.
Most do not have access to contribution matching as only 14% of SMEs offer it, with the rest only contributing the minimum statutory requirement.
Smith said: “Employers could always do more than the minimum, such as offering matching contributions, and continuing to pay contributions during pension pauses, such as unpaid maternity or parental leave.
“Or by simply encouraging employees to sign-up to see their pensions online, or download pension apps so they see their pension in real time.
“This can also encourage them to review their pension contributions and investment options to ensure they are on track for the retirement they aspire to.”
The study surveyed 2,000 working adults and 500 UK small and medium sized enterprises (SMEs) in the UK.
Original Article: HR Magazine
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