The HR profession is polarised on the issue of employee take-up of company pension schemes.
The annual pension survey from consultancy Hewitt Bacon and Woodrow, published last week, showed that less than half those employees eligible to join their occupational pension scheme actually do so.
Chris Cairns, pensions specialist at Hewitt, said the research showed employers were becoming frustrated that their commitment to providing a scheme and the burden of costs involved were not being valued high enough.
“Unless employees begin to take control of their pension arrangements and take-up and contribution levels improve, there is a real risk that companies will increasingly question why they are providing pensions at all,” he said.
Take-up rates at big companies have fallen more sharply than at smaller employers. Last year, 13% of firms boasted between 80% and 89% participation. This year, that has fallen to 5%.
However, some senior HR executives disagree.
Danny Kalman, HR director at electronics company Panasonic Europe, said he was surprised at the results, as there was now more interest in pensions because of recent media coverage.
Stephen Luckhurst, group HR director at IT firm Qinetiq, said take-up rates in his organisation were high, reflecting the quality of the scheme and the way it is communicated to staff.
But Keith Luxon, HR director at utilities firm Three Valleys Water, said despite all the press coverage, many employees seemed uninterested and uninformed.
Feedback from the profession
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Philomena Gray, HR director, Clear Channel
HR has a pivotal role in ensuring that both individual and business requirements are met.
Keith Luxon, HR director, Three Valleys Water
If occupational pension schemes are going to prosper in the future, who should take responsibility? If it’s the state, then many will abdicate personal responsibility. If it is a joint approach between the state, companies and individuals, a whole range of communication, selling and possibly compulsion that is needed.
Jackie Bornor, head of HR, IG Index
I would question whether apathy is the correct reason for non-joiners as the additional cost seems to be the main issue. And it is age-related – younger employees feel they are stretched for money as it is and it all seems so far in the future.
Nigel Godbolt, HR director, Ryder
Clear communication about the benefits, costs and requirements of the pension scheme, in conjunction with the other benefits, helps staff understand what is on offer.
Lucy Lofting, HR director, Royal Caribbean Cruise Line
Tax relief on company contributions to pension schemes would increase the employers’ motivation to continue with occupational pensions and would help those in work to provide for their own future requirement, thereby reducing the burden on the state in the years ahead.
