UK employees ‘unconcerned’ about pension provision

UK
workers are relatively unconcerned about their pension provision, and are
generally satisfied with pension benefits provided by their employer, according
to a new study by Mercer Human Resource Consulting. 

The
findings of the research are dramatically at odds with the warnings of
financial analysts, and the conclusions of the recent Sandler and Pickering
reports, that a growing percentage of UK workers are not saving enough to meet
their financial needs in retirement.

Only
1 in 5 employees said they are concerned about their pension provision.  Some differences are observed across
industry sectors, and concern is highest in manufacturing (25 per cent) and
lowest in the NHS (15 per cent). 

Small
differences are also observed across age groups, where the percentage of
employees concerned about their pension provision is highest for 34 to 44
year-olds (25 per cent) and lowest for 16 to 34 year-olds and 55 year-olds and
above (both 21 per cent).

Dr
Patrick Gilbert, head of organisational research and effectiveness at Mercer,
believes there are several reasons why employees should be more concerned about
pension plans: 

–
There is a growing shortfall in retirement savings, currently estimated at more
than £27bn in the UK

–
An increasing number of organisations are changing from defined benefit to
defined contribution schemes, therefore shifting a greater portion of
responsibility and risk to employees

–
Employer payments to new defined contribution schemes are often lower than to
defined benefit schemes

Gilbert
said: "I suspect that many employees are in a state of denial.  It makes them nervous to think that they
could face financial difficulties in retirement, and many are confused by the
increasing complexity of financial choices they have to make."

Other
findings:

–
More than seven in 10 employees feel their pension plan is either ‘very good’
or ‘good, despite the retirement savings shortfall and the growing shift from
defined benefit to lower-cost defined contribution schemes

–
Some differences are noted across industry sectors, with the least favourable
ratings found in retail (58 per cent), and the most positive in the NHS (87 per
cent) 

–
Differences are also noted for length of service, with long-serving employees
having more favourable views about their pension plans 

–
Of those employees with less than two years’ service, only 6 in 10 (63 per
cent) believe their pension plan is good, compared with almost 8 in 10 (79 per
cent) of those with over 15 years’ service

Communication
of benefits

Despite
the growing complexity of retirement plans, and evidence indicating a general
level of financial illiteracy among employees, the majority of workers feel
they are well informed.

More
than 7 in 10 (72 per cent) say they can easily find answers to questions they
have about their benefits, including pensions, and almost 6 in 10 (58 per cent)
feel their organisation does a good job of communicating information about
benefits. 

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Dr
Gilbert said: "Pensions are inherently complex, and they have changed
dramatically in recent times. The fact is that most employees are not well
informed about their retirement income, and assume that things will somehow
work out for the best. Employees don’t know how much they truly don’t
know."

By Ben Willmott