Pensions problems are being made worse

Staff will not fully value and appreciate the benefit of their occupational pension scheme unless employers communicate the scheme effectively. A new pension guide, from the Chartered Institute of Personnel and Development (CIPD) and the Employer Task Force on Pensions (ETF), uses case studies to demonstrate how small, medium and large organisations can communicate their pension schemes effectively to benefit the business.

Charles Cotton, CIPD Reward Adviser, says, Pensions can cost employers a lot of money - but they can also be a huge investment for the business. As people become more worried about the future of retirement, the pension offered by an employer could become more of a deciding factor for potential employees. But far too many employers with excellent pension arrangements are hiding their lights under a bushel.

Organisations have different challenges to face around their workforce demographics and available budgets. There is no single great pension scheme or one way to communicate. Employers should think about the bigger total reward picture and select a pension scheme that meets the needs of the business. They also need to think about the procedure and the way that they communicate the pension scheme to their staff, making sure they invest enough time and money to select a communication medium suitable for their staff such as email, posters and presentations, and ensure employees are able to understand this information. This can help turn pension costs into a huge investment for the business.

Communication is a real problem and CIPDís research found very few employers keep staff informed about their pension arrangements on an on-going basis. CIPDís report, Pensions and Retirement: Attitudes and Expectations, found almost 1 in 5 over-50s interviewed stated they had little or no understanding of how their pension schemes worked. This rose to 1 in 3 respondents in the under-25 age group.

Good pension schemes can help with the recruitment and retention of high quality staff, but only if they are communicated in a way that employees can understand. This guide will help employers to communicate their pension scheme effectively, by:

*Showing how some key pensions challenges are being addressed within a number of organisations

*Providing ideas and tools to use

*Demonstrating good practice

Sir Peter Davis, Chairman of the Employer Task Force on Pensions, says: Saving for retirement is becoming more and more important in a society where people are living longer. Many people just donít understand the value of employer pension provision and the lack of awareness has had a direct effect on demand. If employees donít value pensions, employers are less likely to provide them. This guide helps employers understand the kind of things they can do to ensure the scheme is a success and benefits the business.

The guide highlights some of the challenges organisations have faced and the solutions they have put in place to ensure their pension scheme is a benefit to the business. Case studies include:

Nationwide - the high take-up of the pension scheme by groups that traditionally are not interested in pensions is evidence of the effectiveness of pension communication. Around a third of its 15,600 scheme members are under 30.

Honeywell - the main reasons for reviewing the current pension arrangements included providing a modern, unified pension scheme with a competitive structure for cost, recruitment and retention while ensuring a positive employee relations impact.

GAP - to stimulate interest in its new stakeholder scheme the company revamped its communications to appeal to its young image-conscious staff. Since the new communications initiative take-up rates have trebled.

Eli Lilly - to be successful, the organisation has to supply quality products and produce them in a flexible manner. This requires high-calibre and adaptable staff, who will come, stay and be engaged by being offered a quality pension as part of a wider ítotal rewardsí approach.

Acme Whistles - Acme Whistles is a small manufacturing business based in Birmingham. It was established in the UK in 1870 and is the worldís leading manufacturer of whistles for sporting, military, industry and leisure use. It operates a Group Person Pension arrangement. Because of its size, communications about pensions usually takes place on a one to one basis. While take home pay is very important to its employees, explaining why it is important to save for retirement has meant that 42 of its 60 employees are members of the scheme.