Lady Barbara Judge says companies must understand the importance of pensions if they are to attract and retain talent.
As we all know, young people view work differently from the older generation. There is also much more discussion about the gig economy and the fact that, whereas years ago people expected to stay with one or two employers for their whole career, today most young people will have multiple employers or start businesses on their own, or otherwise work in a fashion very different from their parents.
In a world where talent is one of a company’s most important assets, employers need to be very mindful that attracting and retaining such talent is a key part of their business
I do know that when I first started working for a British employer many years ago, workplace pensions were a very important part of employee benefits and were much more available than in the US.
In the US, young people did not talk about pensions at all – perhaps because they thought they would never get old – and looked at salary, bonuses, medical care, life insurance and options as the most important perks in any job.
Employers underestimate attractiveness of pensions
As chairman of the Pension Protection Fund from 2010 to 2016, I was very involved in the adoption of auto-enrolment, and firmly believe it was a good thing for the country’s employees. But many people felt that pensions were an outdated mode of compensation and that young people did not value them.
Accordingly, I read with great interest a study prepared by Hibob entitled ‘UK Employee Benefits – State of the Nation 2017’. Hibob, a cloud-based HR and benefits platform, undertook in-depth research analysing employee and employer perceptions around pensions.
The study analysed the responses of more than 4,000 employees and 500 benefit decision-makers in the UK. This research revealed the difference of beliefs between what employers think and what employees actually want when it comes to pensions. The results are very surprising.
Indeed, 57 per cent of employees surveyed see their pension as a critical part of their package, particularly when choosing a job. On the other hand, about 60 per cent of employers surveyed believe that their employees neither understand nor care about auto-enrolment.
The study also showed that 66 per cent of employer decision-makers said that when it comes to offering benefits, they only did the minimum required to meet their legal obligations, whereas 54 per cent of the employees surveyed saw a pension as the most important workplace benefit.
A key company benefit
It is interesting to note that seven out of 10 millennials see pensions as a major part of their overall rewards package, and that 50 per cent of employees say a pension is an essential factor when choosing their current job. Even more (67 per cent) said that a pension is an important part of their overall rewards package.
Lady Judge: Employees want pensions in benefit package
Small and medium-sized employers who underestimate the value placed on pension benefits by employees are hindering their ability to attract and retain staff, former Pension Protection Fund chair Lady Barbara Judge has warned.
What does all this mean? It means that not all employers understand their workers as well as they think they do. It also shows that employees are looking to the future and want to be ready for retirement, even if it seems a long time away.
In a world where talent is one of a company’s most important assets, employers need to be very mindful that attracting and retaining such talent is a key part of their business.
The UK is experiencing its lowest unemployment rate for a very long time and there is a real competition among businesses for talented employees. It is important to ensure that the benefits offered are appropriate and do the job that they are meant to do – that is, attracting and retaining employees.
Lady Barbara Judge chairs the Institute of Directors and HR start-up Hibob
