Pension discussions should be put on hold for the time being as more individuals prioritise overcoming obstacles brought on by the cost of living crisis and climbing the housing ladder.
This was one of the main conclusions from a panel debate at the Corporate Adviser Summit, discussing what the cost-of-living means for pensions and employers’ broader benefit offering.
Cloud8 CEO Dipa Mistry-Kandola said: “Pensions is parked and I think we need to get over that for the next 18 months to 3 years because it’s just not a priority for the employers or employees.”
She highlighted that retaining staff is one of the biggest issues businesses have as they try to deal with the rising cost of living crisis, which is also impacting them.
She said: “We know we have to be self-sufficient in retirement but right now the priority is the property ladder, running our homes and the day-to-day expenses. People go to work to enjoy things today so we really need to switch that conversation. People don’t care right now. It’s not a priority for them at all. We are not connecting to the human beings that we are delivering these services to.”
Parking pensions, according to Partners& wellbeing and benefits head Steve Herbert, would be “dangerous territory”.
Lee Walker, head of DC client relationships and acquisitions at LGIM, concurred with Herbert that there is a danger in parking pensions and that people should be aware of the repercussions of opting out if they so choose. He continued by saying that pensions must be prioritised and valued.
According to Herbert, many people are unaware that they can opt-out of pensions or don’t know how to do so, so it seems like an unlikely issue for the moment.
Heidi Allan, senior consultant and director of financial wellbeing at LCP, agreed and said that understanding the long-term implication of pausing contributions is important.
Allan focused on relatability and the value that different people place on pensions or critical illness, which ultimately depends on individual needs and goals. She continued, saying that she is also aware of how “life-changing” employee discounts can be for individuals who are now having difficulty affording day-to-day living expenses.
She continued by saying that those dealing with the rising cost of living might not place much significance on employee discounts. Allan pointed out that employers who have a benefits package in place that might not be adequate for all employees and their individual needs face a hurdle as a result of this.