A survey of over 300 HR Managers1 by the National Association of Pension Funds (NAPF) has found that pensions continue to be an integral and important part of many company remuneration packages.
The survey found that 91% of respondents felt that offering a pension helps position their company as a responsible employer and 89% believe they have a duty as employers to help their employees prepare for retirement.
2012 Reforms: While nearly half (49%) of companies said they would maintain their existing pension arrangements after 2012,18% of respondents said that they would switch to Personal Accounts – some for new employees and others for both new and existing employees.
HR Directors sit as trustees on a quarter (25%) of occupational pension schemes2 putting them at the heart of decision making. The NAPF has recently launched a free service, HR PensionsConnection3 to provide information and support to HR professionals involved in their organisation’s workplace pension.
Launching the survey, Nigel Peaple, NAPF Director of Policy, said:
“The views of those at the heart of companies show that employers view their workplace pension as something deeper than just a normal part of the employment package. There clearly remains a strong sense of duty and responsibility towards their workers which employers should gain more credit for.
“There are of course still some issues to resolve around information and understanding but these are matters which are being improved upon.”
Survey Details:
Reasons for offering pensions: It is evident that while recruitment and retention remain strong reasons for offering a pension, the sense of duty employers have towards their employees is stronger. A large majority (91%) of respondents felt that offering a pension helps to position their company as responsible employers. 89% believed that they have a duty as employers to prepare their employees for retirement. 88% said that pensions provide a tax-effective way for their companies to reward people and 68% felt that without a pension they would not be able to recruit or retain staff.
Table 1: HR Managers’ opinions on pensions
| | Agree | Disagree |
| Offering a pension helps position us as a responsible employer (330 respondents) | 91% | 6% |
| We believe we have a duty to help employees prepare for retirement (331 respondents) | 89% | 9% |
| Pensions are a tax-effective way for our company to reward people (331 respondents) | 78% | 17% |
| We have always offered a pension and it would be difficult to change this (332 respondents) | 76% | 20% |
| Without a pension we would not be able to recruit or retain the staff we need (332 respondents) | 68% | 30% |
Understanding of pension issues: 60% of the respondents felt that employees did not understand pensions or retirement planning. Only 3% of respondents thought that their employees understood pension issues well. This echoes similar findings from an earlier NAPF survey4 which showed that more than one in four (29%) of employees were aware of pension tax relief and more than one in five (22%) were unaware of employer contribution rates.
Table 2: Employee understanding of pensions and retirement planning issues
| Very well | 3% |
| Fairly well | 35% |
| Not very well | 46% |
| Not at all well | 14% |
Effective communication: Receiving information face to face was seen as the most effective way of communicating about pensions with 85% of respondents saying that they felt one to one advice from a financial adviser was the most effective communication method. Retirement planning tools were felt to be the least effective communication method with 67% of HR Managers finding them effective.
Table 3: Effective methods of communicating with employees about pensions
| | Effective | Not Effective |
| One to one advice from a financial adviser (316 respondents | 85% | 15% |
| Information about the pension scheme included in an employee’s joining pack (324 respondents) | 79% | 22% |
| Annual Benefits Statements (315 respondents) | 77% | 22% |
| Information and guidance provided at group meetings in the workplace (320 respondents) | 75% | 25% |
| Retirement planning tools such as online calculators (309 respondents) | 67% | 33% |
Concerns about liability: 35% of respondents said that concerns about being held liable for unsuitable choices made by employees prevented them from giving as much information about pensions. However, 40% were not concerned enough about the issue to prevent them from giving employees information.
Table 4: Do concerns about being held liable for unsuitable choices made by employees prevent you from giving as much information about pensions?
2012 reforms: Nearly half of respondents (49%) believed that their companies would maintain existing pension arrangements for both current and new employees. 18% felt that they would switch to Personal Accounts – some for just new employees (12%) and others for both new and existing employees (6%) raising fears of levelling down. Despite Personal Accounts being only four years away a third of respondents (33%) did not know what approach they would take to their introduction.
Table 5: Approach organisations will take in response to 2012 introduction of personal accounts
| Continue running existing pension arrangements for both existing and new employees | 48% |
| Switch to personal accounts for new and existing employees | 6% |
| Keep existing employees in your own scheme but switch to personal accounts for new employees | 12% |
| Don't know | 33% |
ENDS
Notes to editors
1. The NAPF’s 2008 HR Survey, HR Managers and Pensions, is available on the NAPF website.
The NAPF conducted the survey of 332 HR contacts in conjunction with Personnel Today. All respondents were directly involved in managing human resources decisions for their company.
2. Details of the NAPF’s Workplace Pension Survey can be found here.
3. HR PensionsConnection can be found at www.napf.co.uk/hrconnection.
4. Details of the NAPF’s annual survey are available here.
About The National Association of Pension Funds Limited
The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Journalists requiring further information, please contact Ruth Wharram
020 7808 1345 ruth.wharram@napf.co.uk 07825 171446
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