Understanding pensions

A topic high up on the recruitment radar

It is essential that employers provide clear information regarding their commitment to a pensions scheme. Many employers do already work hard at improving an understanding of pensions among their workers, but research shows that people want to know the level of commitment even before they start their first day[1].

So this needs to include the terms of the plan and how it will be paid for or matched by the employer. By providing this information, an employee can feel confident that they are making an informed decision about their long-term financial security when joining their new workplace.

Aspects of planning
Additionally, it establishes trust between employers and employees from the outset, allowing both parties to focus on building a strong professional relationship. Furthermore, employers can use this opportunity to highlight any additional benefits available with retirement plans, such as professional advice and guidance to help ensure all aspects of planning are being addressed.

The research also highlights that the most important consideration for job seekers in the UK is work-life balance (82%), followed by salary (80%) and the commute (70%). Pension arrangements (65%) rank fourth on the list of importance. This is despite the fact that, similar to basic salary, details of the workplace pension plan are often not included in the job advert.

Total reward package
It’s a clear signal to employers that including the total reward package, both monetary and non-monetary, is a good move. Even more so in the current environment where employers face not only a more fluid labour market, where job rotation sees workers moving jobs more frequently, but also the lowest unemployment figures in nearly 50 years.

The challenge for employers to attract and retain the right candidates is clear, as the concept of a job for life has well and truly had its day. The research shows more than one in five under-25s have already worked for five or more employers. In fact, just 8% of 18-24-year-olds expect to be with their first employer for more than five years, moving jobs much more frequently than previous generations.

Demands of workers
The generational shift can also be seen in the demands of workers. Younger people place greater importance on flexible working patterns. Seven in ten (71%) of 18–34-year-olds see flexible working patterns as important or vital when applying for a new job, compared to three-fifths (62%) of 35-54-year-olds and half (49%) of those 55 and over.

From an employer’s perspective, advertising details of the workplace pension can be key to attracting and retaining talent. Research from the online job website Indeed found that less than half (49%) of job adverts listed pensions as a benefits[2].

Statutory minimum contribution
Faced with a competitive job market, businesses are having to compete hard to attract the best talent and employers need to make themselves as attractive as possible. As a result, employers may want to consider being more upfront with details of their pension arrangements in future, even if they’re just providing the statutory minimum contribution.

While workers are most likely to prioritise work-life balance, it’s clear that pension benefits are an important factor that feature surprisingly high up on the recruitment radar. To help tackle skill shortages, organisations need to tune in to the components workers value most when changing jobs. Shining more light on the benefit of a pension could help differentiate them in a competitive job market and secure the best candidates.

Source data:
[1] Royal London partnered with independent research agency Cicero/amo to undertake a nationally representative survey of 3,042 adults in the UK. Fieldwork was conducted between 13 – 24 May 2022. Royal London has published a new report – ‘The Future of Auto Enrolment’, to celebrate the 10th anniversary of the introduction of Automatic Enrolment.
[2] A review of 400 job listings (by online job postings website Indeed) across marketing, tech, insurance, and customer service sectors, found that less than half (49%) of job adverts in February 2022 listed pensions as a benefit.