- Amongst those under 50 years, half (49 per cent) admit to not doing enough to prepare financially for their retirement
- 44 per cent of workers said the quality of a company pension scheme is important when looking at potential employers
- Two fifths (40 per cent) of working respondents stated that they felt employers should offer full financial advice if they provide access to a pension with a further 55 per cent stating that they thought that their employers should at least offer some kind of general information
Scottish Widows today published its Workplace Pensions Report which found that although a majority of employees are reliant on their company pension as their main source of retirement income, some 42 per cent of respondents with a defined contribution (DC) scheme did not know how much their employer actually contributed.
One of the largest surveys of its kind with a sample of more than 5,000 adults, the Scottish Widows Workplace Pensions Report 2010 found that amongst those who expect to receive an income from a private pension in retirement43 per cent were still in final salary schemes, with 33 per cent relying on these defined benefit (DB) schemes to provide them with more retirement income than any other private pension.
The report also shows the ongoing shift from defined benefit to defined contribution. Amongst those who expect to receive an income from a private pension in retirement nearly half of the respondents over 50 were in final salary schemes, compared with less than one third (29%) of those under the age of 30 were found to have DB pension plans.
Ann Flynn, Head of Marketing Communications, Corporate Pensions, Scottish Widows, said: “Despite the death of the final salary pension due to its lack of affordability or sustainability, it is clear that many people are still incredibly reliant on their employers and still believe that their defined benefit scheme will provide them with enough money to support them throughout their retirement. This is a worrying thought, and we would therefore encourage everyone to investigate if their existing savings are adequately covering their needs.
“Defined contribution schemes do provide challenges, but they also can create great opportunities and employers need to be working with employees to help them to build better investments for the future.”
The report underlines the importance of pension provision as an employee engagement tool, with over two-fifths of workers saying that the quality of the company pension scheme is an important factor when thinking about changing employer This was further supported by 63 per cent of employees stating that they would be less likely to look for a new job should their employer increase their pensions contributions.
Additionally, the report clearly demonstrates that the need for employers to offer advice and guidance to help employees better understand their pension scheme and its benefits, as well as their wider saving needs. Two fifths (40 per cent) felt employers should offer full financial advice if they provide access to a pension, with .a further 55 per cent stating that they thought that their employers should at least offer some kind of general information . In 2009, the corresponding ratios were 33% for full financial advice and 43% for general information about retirement planning, representing a cumulative increase of 25% in terms of this need.
Ann Flynn said: “As the face of UK workplace pension provision continues to change, it is important for employers to engage with their employees to help their understanding of the benefits available to them as the individual has to take responsibility and make the correct decisions about their short, medium and long term financial planning needs. As a result of this increased need, Scottish Widows launched the mymoneyworks platform in April this year. mymoneyworks was has been designed to provide a trusted place for employees to go for all their financial information, including workplace benefits. The aim is to help employers engage with their employees about the benefits available to them and to make it easier for employees to access financial education and guidance to help them take control of their financial planning.”
