Compliance top issue driving DC pensions

Retirement plan-pensions-2015

More than half (56%) of respondents say compliance with legislation is their top issue driving their defined contribution (DC) pensions provision, according to research by Towers Watson.

Its Fit for retirement report, which surveyed 101 organisations, also found that more than a third (38%) of employers cite their employees’ ability to retire is a top priority.

The research also found that 31% of respondents cited competitiveness as a top priority driving their pensions provision, while 30% believe that retention of employees is a driver.

Phil Percival, head of the fit age programme at Towers Watson, said: “Currently, compliance is crowding out employers’ ability to focus on retirement adequacy.

“This is perhaps not surprising given the barrage of changes the industry has seen in the last decade including the introduction and subsequent reductions of the annual and lifetime allowances, greater focus on governance, auto enrolment, the end of contracting-out and now the new DC pension reforms.

“Such a flurry of change is preventing organisations from focusing on the real reason for providing pension plan, either for the employer, in terms of attraction and retention, or for the employee in terms of their ability to retire.

 “With the number of people in employment aged over 65 already doubling in the last 10 years, employers need to make sure that they understand the financial situation of their workforce in order to gauge the extent to which workers will be able to retire.

“With this understanding they can start to help employees more effectively plan for retirement at a time of their choosing, as well as planning their own workforce requirements in the near future.”