It says the approach offers substantial enhancements to the flexibility and value of current pension plans at no extra cost. The savings plan accrues with interest in a similar way to a pension plan and, once vested, employees use the assets to invest in savings opportunities that meet their individual financial needs. This can include housing, debt repayment and Isas, as well as other savings options.
The plan is offered through a single package and is communicated through targeted in-house seminars, print and web-based material and support and advice.
Tony Pugh, UK head of defined contribution pension services at Mercer, says: “We recognise that employees have competing financial demands and that they place far greater value on employers assisting them with those that are more immediate. Although pension is an extremely important piece in an individual’s financial jigsaw, it often moves down the priority list when faced with funding a house purchase or paying off debt.”
Pugh commented: “It is essential that financial education is provided to enable employees to make the right personal choices. For many, pensions will still be the right way to go but the savings plan offers the ability to spread savings across other investment opportunities and meet more immediate financial priorities where this is appropriate.”