Two-thirds of firms say workers’ lack of understanding and communication are the biggest challenges in establishing company pension schemes.
A poll of 235 firms by consultants Mercer reveals, despite the hurdles facing employees, only 24 per cent of schemes offer financial planning support and 80 per cent rely on generic literature.
“There is a clear contrast between what employers want for their schemes and what is being achieved. Putting resources into improving members’ understanding is paramount in order to get them to value the scheme,” said Tim Burggraaf, at Mercer’s retirement business.
“Communication programmes need go beyond simply making information available.
“They should reach out to meet individual members’ needs. A measure of successful schemes is whether their members are sufficiently educated to understand how much to save for retirement.”
The research also reveals 75 per cent of schemes offer a default investment option, which 70 per cent of employees use.
On average 15 investment options are offered, but some firms offer up to 100 funds. However, the funds on offer are not regularly reviewed in 42 per cent of schemes.
“With so many members in the default fund it is important to ensure the design of the default fund option is right for as many members as possible,” said Mr Burggraaf.
“Considering members pick up a large part of the cost of their pension, and also carry most of the risk, it is the employers’ responsibility to keep an eye on fund selection and to proactively make changes when investments fail to deliver.”
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