Many employees are unconcerned about the value of their pension scheme, if they have a scheme at all, until they are close to retirement. Indeed, many employees are hard pressed to specify the benefits their workplace pension scheme offers.
Two things are changing this situation. First, changes to the rules regarding when people can access their pension fund, which came into effect in April 2015. This means that from age 55 onwards people can get access to as much of their pension money as they like, when they want it.
Second, the advent of auto-enrolment, making it compulsory for all employers to offer a pension scheme. The government has set minimum levels of contributions that must be paid to the workplace pension scheme by the employer and employee.
These changes are a golden opportunity for employers to emphasise the benefits of a staff pension scheme at a time when the topic is constantly in the media. With the labour market tightening and good staff in short supply, a staff pension scheme will be viewed as a significant additional benefit. Such schemes may also prevent existing staff from leaving for other employment. This is particularly the case if the scheme provides benefits better than the auto-enrolment scheme.
One message employers need to emphasise is with staff likely to be working until their 70s, pension contributions by an employee in their 20s have nearly 50 years to accumulate benefits. This is a compelling argument that employers need to make.
Clive Lewis is head of enterprise at the Institute of Chartered Accountants in England and Wales (ICAEW)
