The shift to a more holistic approach to financial wellbeing shows how employer attitudes have changed since 2018 when the last edition of the research was conducted. In 2018, just over half (54%) of employers said they wanted to offer access to supplementary savings vehicles for employees (such as Individual Savings Accounts (ISA) and Lifetime ISAs). This figure has now risen to 75% as more employers have embraced a holistic focus on financial wellbeing.
This trend towards a more holistic approach to workplace savings also extends to financial education and online tools. 94% of respondents agreed that members should be able to easily see their company pension alongside other pensions and savings accounts, while just 6% said that company pension engagement should always be kept separate from personal finances.
Mark Pemberthy, Benefits Consulting Leader at Buck in the U.K., comments: “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.”
Another major trend recognised by the new whitepaper was continued consolidation in DC pensions. In 2018, 24% of respondents wanted to take direct responsibility for monitoring and managing their workplace DC pension scheme. The latest whitepaper found that this figure has now fallen to just 6%, showing that nearly all employers want to delegate the formal responsibility of running the pension scheme to external specialists.
These findings are consistent with data from The Pensions Regulator, which found that the number of occupational DC schemes has more than halved since 2012, showing the steady trend of smaller occupational DC schemes consolidating with larger schemes, particularly master trusts.
Mark Pemberthy continued: “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.”
The full whitepaper DC Pensions: The Big Picture can be accessed here.
|
