Majority of workers want more transparency around pensions, research reveals

Employees call for firms to be more open about the realities of retirement as three-quarters admit not engaging with savings

Employees want their bosses to be more transparent about retirement savings shortfalls, according to research, as current efforts to engage in workplace pensions fall short.

Nearly all (96 per cent) UK workers believe their employer should be more open with their workforce about pension shortfalls and the realities of retirement today. 

The research, conducted by the Atlas Master Trust, part of Capita, examined the reason for continued low engagement levels in workplace pensions. 

In the study, which surveyed 200 pensions managers, 200 senior finance professionals, 100 senior HR professionals and more than 2,000 employees, almost three-quarters (72 per cent) of employees admitted they were not actively engaged with their workplace pension. Additionally, more than a quarter (28 per cent) said they had never reviewed their pension. 

More than two-thirds (68 per cent) of workers felt their employers could do more to encourage them to maximise their pension contributions and save for retirement. 

Roz Watson, head of engagement at the Atlas Master Trust, said employees were calling for a more pragmatic and honest approach from their employers when it comes to pensions and how much they need to save for retirement. 

“Too many employers are focusing their engagement efforts on increasing visits to a website or downloads of an app,” Watson said. “Real engagement is about driving genuine awareness and knowledge of pensions, empowering members to make proactive and informed decisions and to understand the implications of these decisions.”

The study revealed that the lack of this engagement amounted to more than three-quarters (77 per cent) of workers admitting they did not understand enough about pensions to make considered and informed decisions about their future savings. 

And worryingly, three in five (60 per cent) believe that minimum contribution levels for auto-enrolment workplace pension schemes reflected the amount the government recommends to achieve a comfortable retirement. A quarter (25 per cent) of the workforce said they would ‘probably just rely on a state pension’ for their retirement. 

Charles Cotton, the CIPD’s senior performance and reward adviser, said HR professionals can add value to the wider organisation and its people by encouraging employees to think about when they would like to retire and how much they would like to retire on, and then helping staff work out what this means in terms of pensions contributions. 

“This might involve employees having to contribute a bit more, working a bit longer, or a mixture of both,” Cotton explained. “There are lots of tools and apps to help employees set retirement goals, and most providers will have ones that employees can access, so signposting is important.”

Cotton also highlighted previous CIPD research indicating that employees would like more information about how their workplace pensions investments are performing, the charges they are paying and where their money is being invested.

The research suggested that HR could meet these needs through a financial awareness programme, which would help put employees in a better position when deciding how much they needed to save. 

The Atlas Master Trust research also found employers and HR were increasingly aware of their need to take a more direct and open approach to dispersing information about pensions to their workforce. A majority (90 per cent) of HR leaders and finance leaders (81 per cent) said they needed to be more transparent about savings shortfalls in their pension communications to workers.

Only 39 per cent of HR leaders said they were ‘very satisfied’ with their efforts to drive engagement with workplace pensions, dropping to 33 per cent for finance leaders. 

Helen Morrissey, pension specialist at Royal London, said this research confirmed the concern that savers believe auto-enrolment minimums are enough to help people retire comfortably – when in reality “they are only the starting point”. She said it is in an employers’ and HR’s best interest to ensure their workers have plans in place for retirement as they do not want a workforce that continues to work because they have no other choice. 

“This risks people staying in jobs they are no longer physically able to do or they may no longer be engaged with the role – these are all big issues for employers,” Morrissey said. But it is encouraging to see that so many employers are committed to improving understanding of pensions, and they can make a real difference by doing more to promote their workplace schemes to employees.”