Employees need to understand the benefit of a pension in order for an employer to see a benefit from investing in a scheme, according to Paul Armitage, head of DC consulting at JLT Benefit Solutions.
Speaking on the second day of the National Association of Pension Funds’ annual conference, Armitage said that defined contribution (DC) pension schemes require large investment from organisations, especially for auto-enrolment. The estimated cost of auto-enolrment for UK organisations put the 2018-and-beyond cost at around £4bn and rising. Many employers will be asking whether there is any return on investment, so in order for the employer to see the benefit of offering a scheme, employees need to appreciate it as benefit, said Armitage.
He added that this can be achieved by building greater employee engagement.
“There are some business benefits and the case is far more compelling if we can engage members in DC schemes moving forwards,” Armitage said.
In order to improve employee engagement with pensions he suggested asking questions about an organisation’s communication strategy, for example, is it engaging or simply compliant with regulations, how are they delivered, are they consistent, and are they personalised to the individual scheme member?
