The majority (76%) of respondents rate pensions reform as the key benefits challenge over the next 12 months, according to research by Thomsons Online Benefits.

The annual Employee Rewards Watch research, which surveyed 430 employers, found that just 19% are already using auto-enrolment to enroll eligible employees into their pension schemes.

The top reasons reported for why employees do not engage with, or take up, their pension benefits, include: affordability (55%) and lack of understanding (41%).

Additional findings of the survey include:

  • 45% of respondents said controlling employment costs is their top concern, yet there is an 18% decrease since the 2011 research in organisations that can report on their total reward costs, and 59% still do not have a written reward strategy.
  • 51% will look for other cost savings in their organisations as a result of mandatory employer pension contributions, although many will look to reduce other benefits (16%) rather than cut headcount (3%) or freeze recruitment (2%).
  • 40% of respondents now offer flexible benefits schemes, with 56% reporting that improved employee engagement is the greatest benefit of implementing such schemes.†
  • 11% of respondents provide health and wellbeing benefits primarily to reduce levels of sickness absence, and 38% do not know if their absenteeism levels actually reduced in 2011.

Michael Whitfield, chief executive at Thomsons Online Benefits, said: “During the last 30 years, there have been many changes in the world of pensions, but no change as significant as the introduction of the national employment savings trust (Nest) and the accompanying application of auto-enrolment.

“Everyone should prepare themselves for a roller coaster of a pensions ride over the next few years as we respond to the staging dates and then the subsequent phasing dates, which occur all the way up to October 2018.

“Respondents to Employee Rewards Watch this year have given a very clear indication that this issue is now very firmly on their radar.”

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