From Compliance to Value: Rethinking Workplace Pensions.

After exhibiting at an industry event for finance professionals last month, we were surprised by how many businesses admitted they had done nothing to review their workplace pensions in years. It was a relief to know that most of them had one in place (thanks auto-enrolment), but that was about it. The workplace pension compliance box had been ticked.  

Arguably that’s significantly better than nothing and auto-enrolment has certainly supported millions of employees in getting a foot on the pension ladder. But for most firms and therefore their staff, that's where it ends. And it got us thinking, is that really the best that employers are doing for their employees’ retirement pots?   

The Pensions Commission now believes the UK pension system faces an adequacy challenge rather than an access challenge as many employees are still not saving enough for retirement. The likely policy direction is toward encouraging higher contributions, broader coverage, longer working lives and greater support for retirement decision-making. Employers should view pensions increasingly as part of workforce wellbeing, retention and long-term workforce planning rather than simply a compliance requirement. 

If compliance is the bare minimum, then what determines a good retirement outcome for employees?  We think value for money should be the goal. This means carefully considering and periodically reviewing the choice of provider, checking the scheme charges as these can often be reduced after the scheme has been established, ensuring that there is a sound investment strategy, and a meaningful contribution structure that delivers a decent replacement income for employees. Employee engagement should also extend beyond the enrolment letter – keeping nomination of beneficiaries updated and connecting to the provider portal.  

We think it’s time for employers to ‘pay some attention to their pensions’. Auto-enrolment was never meant to be the start and end point of workplace pension governance. Doing nothing is a decision - and one that affects employees and their livelihoods, long after they’ve left your business.   

If you're not sure whether your workplace pension is delivering the best outcome for your employees, perhaps it’s time for a governance review.  Get in touch with our team today to find out how we can help to improve the quality of your workplace pension to produce better retirement outcomes for your employees.