Talk to staff about their pensions; in association with RBS.
IN recent times, pension schemes with defined benefits (where members receive a level of benefit depending on length of service and salary) are being closed to new members, and replaced with defined contribution (DC) schemes where an employer pays regular contributions fixed as an amount or percentage of pay.
DC schemes are quickly becoming the dominant form of pension in the UK.
Last week the CBI and Mercer launched a new guide to good practice in DC pension schemes. The CBI/ Mercer guide, Saving for Tomorrow: the Role of Defined Contribution Schemes, features case studies showing that firms which engage and support staff, and give clear signals about pensions, benefit from increased take-up and higher satisfaction levels.
Too many employees are not saving for their pension, even though there is often an excellent employer scheme open to them. Sometimes this is due to a lack of understanding of the benefit on offer, but often it can be explained by the negative view of defined contribution that has prevailed in recent years.
With changing employment patterns, and the decline of jobs for life, the flexibility of DC schemes can be an advantage for employees but there still remain misconceptions about the value of the benefits that these schemes offer.
Many staff are put off saving for retirement by the relatively poor perception of DC pensions, despite most of these schemes offering higher pension contributions than the Government-proposed personal accounts scheme.
These unfair and pessimistic views can be changed if firms strive to engage and communicate with staff. Once employees feel more involved, businesses report improvements in pensions uptake and stronger employee relations.
Research has highlighted that employers are concerned about the take-up of DC pensions, and the CBI warns that more staff need to save for retirement to minimise the threat of a pensions crunch.
Liz Smith, assistant regional director, CBI North East
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|Publication:||The Journal (Newcastle, England)|
|Date:||Jul 15, 2008|
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