The new auto-enrolment system for pensions, taking decisions away from employees, may deter engagement with pensions. However the obligatory contributions will not be enough to provide for retirement, and greater engagement with workplace pensions schemes is needed. Dr Sandy Pepper of the Department of Management investigated whether the total reward model, used by Thomsons Online Benefits to communicate all employment benefits to clients’ employees, results in higher engagement levels.
While recent research has concentrated on nudging people into making better pensions decisions, this report focuses on understanding what drives more active engagement with pensions decision making. Employees of Thomsons’ clients and of other companies were surveyed to look at the extent to which people are prepared to defer their income, positively value a pension, and act upon those intentions.
Respondents whose employers use a total reward model were found to be more engaged with their pension when looked at from each of these three perspectives. They had much more positive attitudes to pensions, were more likely to be a member of their workplace pension scheme (irrespective of salary level) and were much more likely to pay in at least four per cent of their salary to a pension scheme.
Dr Pepper told The Independent: “Without effective communication around auto-enrolment there is a fundamental risk that people will not recognise the importance and value of pension contributions. This represents a missed opportunity for businesses and a potential headache for Government.”
The Independent story
Read the report