Member engagement – Is this the only issue? 

We all wish we could conquer member engagement, right? It’s a challenge for us all and no one seems to have the answer, yet! 

If the employer doesn’t feel their employees’ pension savings are paramount, what chance do we have in engaging employees?

So maybe we should start with employer engagement instead? 

The statistics of DC pension contribution  

Did you know, The Financial Survey of Pension Schemes (FSPS) estimates that total membership of defined contribution (DC) occupational pension schemes was 22.4 million at the end of 2019? The FSPS further went on to state that contributions to DC pension schemes rose rapidly in 2018 and 2019 and that this was a result of auto-enrolment. Auto-enrolment, not member engagement.¹

In a survey published in January 2023 by the Department for Work and Pensions (DWP),² on member engagement with workplace pensions, the DWP reported the following;  

“Participants trusted the decision their employers had made about which pension provider to use and felt it was safest to stay with the pension provider their employer had selected”.  

“Participants were satisfied that they were enrolled in a pension scheme and trusted their employer to have chosen the best scheme for them.”  

“Employer contributions were an important motivation for participants to save into their workplace pensions.” 

The findings of this report were based on sixty in-depth qualitative interviews with members who were saving into the default fund of their workplace pension scheme.  

This report raises another common theme, in addition to lack of member engagement, of trusting that our employer is providing a good pension offering. 

What the employers say 

I recently spoke to a few employers about their workplace (DC) pension schemes. Included in these was a Partner of a large finance firm, a Managing Director of a medium size company and a CFO of a FTSE 200 company. Interestingly, they all had the same view. They all felt they were meeting their duty as an employer by providing an auto-enrolment compliant scheme. The value of their employee’s pension at retirement was not a consideration. It seems that they believe, as long as the auto-enrolment threshold is met, and the pension provider is taking care of communications they have done their duty. 

Ironically, all three will have a very good pension of their own and all three are looking forward to what I would say is a very “privileged” retirement. This was a small number of employers; however, I wonder if this is the case more widely? The employer’s own motivation to secure a comfortable retirement for themselves didn’t seem to translate to ensuring their workforce has the same opportunity 

Furthermore, the trust employees seem to put in their employer to provide an adequate pension might seem misplaced.  

If we were giving employers the benefit of the doubt, we might say that they truly consider the auto enrolment threshold an adequate pension offering.  

But let’s say an employer did want to explore how they might help their employees have more options on retirement – what might they need to know?  

What could employers do to help their employees save for retirement?   

Communicate 

• Give clear and accessible information to new and current employees 
• Hold regular workshops that allow employees to ask questions and truly engage in their pension saving 

Give options 

• Allow employees to contribute more themselves through payroll, to make it as easy as possible.   
• Consider offering a salary sacrifice pension scheme and enabling employees to share the National Insurance savings this benefits from.  
• A bonus exchange scheme could allow employees to manage times of famine and feast and give them the opportunity to bolster their pension pot. 

What are the benefits of better pension benefits? 

If you are an employer don’t forget that your employees turn up every day to help you.  

In today’s recruitment market and to secure your hiring power in the future you must attract, motivate and retain talented and loyal staff members. Maybe the governments enthusiasm to engage the general public in their retirement plans has given employers an excuse to disengage from their employee’s standard of retirement. But equally it has granted employees the know-how to judge a new workplace on the merit of their pension benefits. To not be left behind, you need to lead the way, make pension education and communication part of the norm. Start helping your employees save enough for their retirement today, not only should this be a moral obligation, but it will promote your business too. 

Need help? Contact me via email at Sharon_bebington@dalriadatrustees.co.uk or one of my team https://www.dalriadatrustees.co.uk/team we are all here to help. 

Footnotes

¹ UK pension surveys – Office for National Statistics

² Summary: Understanding member engagement with workplace pensions – GOV.UK (www.gov.uk)