Nearly 97 per cent of UK employers say that they want to help employees achieve good all-around financial wellbeing and not just focus on retirement savings, according to Buck.
One of the important themes uncovered in Buck’s new whitepaper, “DC Pensions: The Big Picture,” on employer attitudes towards defined contribution (DC) pension systems was a significant change in employers’ objectives.
In 2018, 54 per cent of companies, or slightly over half of them, stated that they wished to provide employees with access to additional savings options. As more firms have adopted a comprehensive focus on financial wellbeing, this number has now increased to 75 per cent.
Most respondents—about 94 per cent—agreed that members should be able to easily view their business pension alongside other pensions and savings accounts. Only 6 per cent disagreed, saying that workplace pension engagement should always be kept apart from personal money.
Buck benefits consulting leader Mark Pemberthy says: “Employers can make a huge difference to employee financial wellbeing, especially in the current economic climate. Saving for retirement is important, but it is equally important being financially prepared for the short and medium term and this is being reflected in how employers are now thinking about pensions and employee benefits.
“As ever, the success of any initiative depends on the quality of communication and delivery. Providing employees with the option of personalising benefits to match their priorities can be powerful, but it is important that these are supported by clear communication and guidance to support positive decision-making by employees.”
The new whitepaper identified increased consolidation in DC pensions as another significant trend. In 2018, 24 per cent of survey participants expressed a desire to assume direct management of their employer DC pension plan. The most recent whitepaper discovered that this number has now decreased to just 6 per cent, demonstrating that practically all employers desire to formally hand off the task of managing the pension plan to outside experts.
These results are in line with information provided by The Pensions Regulator, which discovered that the number of occupational DC schemes has more than halved since 2012, demonstrating the persistent trend of smaller occupational DC schemes merging with larger schemes, particularly master trusts.
Pemberthy adds: “The continuing march of consolidation will undoubtedly lead to a smaller number of large DC pension schemes – transforming the future of the DC landscape. This is largely a reflection of government policy, and the Pensions Regulator has placed a major focus on increasing governance standards and member outcomes by encouraging the consolidation of smaller schemes.
“Of course, most consolidation plans require trustees and employers to sacrifice some degree of control over the future of the scheme. For some schemes the trade-offs involved will be worth it, but it’s important to stress that there really is no one-size-fits-all model and all parties should collaborate to identify a solution that is right for their members.”