Employers and employees hold differing opinions on why organisations offer defined contribution (DC) pension schemes, according to research by consultants and actuaries Hymans Robertson.
The state of DC in 2012 report found that more than half (54%) of HR and finance directors who responded to the survey said they run DC schemes to help employees retire on a decent income. By contrast, only 19% of employees who responded believed this to be the case.
The other top reasons for offering DC schemes, included:
- They have historically been offered, according to 71% of employers and 29% of employees.
- They are a good retention tool, according to 43% of employers and 57% of employees.
- They are a good recruitment tool, according to 41% of employers and 62% of employees.
- Other companies do it, according to 37% of employers and 31% of employees.
- They are tax-efficient for employees, according to 30% of employers and 40% of employees.
- Employees ask them to provide one, according to 16% of employers and 23% of employees.
Lee Hollingworth, head of DC at Hymans Robertson, said: “DC pensions have become more about providing the opportunity to save for retirement rather than providing a structure aimed at delivering a good outcome.
“While many organisations now see their only duty as being to provide a vehicle for this kind of saving, employees clearly expect more from their employers.
“With auto-enrolment on the horizon, it is essential that employees and employers start working together now to avoid creating a generation of DC members unable to retire.”