Employers believe staff are responsible for own financial education

The majority of employers (83%) believe it is the individual’s responsibility to educate themselves about financial matters, according to a new report from the Pensions Management Institute (PMI) and Standard Life.

The DC Pulse research also found that just 34% of employers reported a take-up rate of more than 80% in their company’s defined contribution (DC) scheme.

However, 72% of respondents stated at least 80% of their workforce could join if they wanted to.

In response, the PMI has urged employers to lead to way in educating staff on financial matters such as pensions, as individuals may not actively seek out the necessary information.

Vince Linnane, chief executive of the PMI, said: “It is no secret employee engagement in pensions remains at very low levels, and with this in mind it is of the utmost importance that we look for ways to solve this and get more people in the UK saving adequately for retirement.

“Auto-enrolment, however, must not be seen as a fix-all solution to low engagement in pensions. Instead, exploring the key reasons behind these low participation rates and acting accordingly may pay dividends.

“There are a number of initiatives the PMI believes could be implemented which would significantly improve employees’ knowledge and engagement surrounding pensions.

“It is up to the pensions industry to push forward these ideas, which could help educate people about pensions for generations to come.”

Ian Buchan, corporate client development manager at Standard Life, added: “Auto-enrolment will not only create a generation of new savers but presents us with an opportunity to change attitudes towards long-term saving.

“However, our experience shows that getting people to join the pension scheme is only the start.

“A significant number of employees will rarely engage beyond enrolment, unless an integrated communication and education programme is put in place to ensure people make better decisions about savings and investments.

“We need to ensure employers are equipped to deal with these changes which will improve staff engagement in their pensions and benefits and ultimately ensure employees fully value the employer spend.”

Read more articles on auto-enrolment and workplace pensions