Pension provision ranks very low in the list of employees’ financial priorities with only 6 per cent choosing it as the most important benefit they are offered, according to research commissioned by Vebnet and Ceridian.
By far the main financial priority for employees is day-to-day living costs, the top priority for 49 per cent. Saving and repaying debt, on 17 and 14 per cent respectively, are seen as the second and third most important financial priorities. However, pension provision was
seen as much more important in the older age groups with 43 per cent choosing it as their number one priority in the age 55+ category compared to only 7 per cent in the under 25s.
Richard Morgan, director of consultancy at Vebnet, says: “With so many financial pressures these days the focus for most people is inevitably on day-to-day living. However, this could be at a potentially huge cost if pension provision is being deferred in favour of short term needs – I suspect an even greater number of pensioners are now concerned with day-to-day living costs because they did not make appropriate financial provision earlier in life.
“There is still a concern that many employees may not clearly understand the importance of pensions saving from an early age – our research shows the problem clearly, they are valued as a benefit, but come way down the list in financial priority. Employers therefore have an opportunity to improve employees’ general level of financial awareness. This research highlights the need for some form of financial education – if an employee truly understands the benefits on offer – both short-term and long-term it can help tremendously with employee engagement and ultimately staff loyalty and retention.”
Jennifer Stacey, chief people officer at Ceridian, says: “This research highlights the importance of understanding the broader financial needs of employees rather than just pensions. Short, medium and long term investments are all important within a financial plan and these need to be linked to an individual’s goals and aspirations. Pensions are obviously key to this largely because of their advantageous tax treatment.”