Ensuring Financial Security: The Importance of Workplace Pensions

September marks Pension Awareness Week (Monday 9^th – Sunday 15^th 2024) and shines a spotlight on the importance of saving for retirement and the critical role of workplace pensions.

The UK workforce is increasingly concerned about financial security, particularly amidst the cost-of-living crisis. Many are questioning how they will manage post-retirement, given that the full state pension currently amounts to £203.85 per week.

All businesses are now legally required to enrol eligible employees into a workplace pension scheme, often as part of a broader remuneration package. Some companies enhance their employee benefits by offering salary sacrifice (also known as salary exchange).

However, recent researchⁱ, reveals a lack of understanding among employers and employees about the full range of pension options available. For CLA business members, this can represent a significant cost. So, how can businesses maximise their pension schemes and ensure optimal outcomes for members? At CLA Healthcare we can help support design your workplace pension scheme, our seven tips include:

1. Increasing pension contributions over the auto-enrolment minimum: 40% said they had encouraged their employees to invest more funds. However, the more money employees pay in, the more they will have to enjoy in their retirement, as pension-scheme savings are tax free up to certain limits.
2. Review your workplace pension scheme regularly: only 28% of businesses appear to review their workplace pension scheme. Does your scheme still meet the needs of your business and employees?
3. Ensure good governance: 38% of employees would like their workplace pensions to consider ESG issues. Don’t forget to evaluate fund performance, annual management charges, and overall effectiveness.
4. Consider implementing salary sacrifice: 63% of employers said they were aware of the savings businesses and employees can make through a salary sacrifice workplace pension. However, when we asked employees whether they were aware of the national insurance savings that could be made, 68% said no. If not already in place, this can offer significant benefits.
5. Provide guidance and support: Supporting employees with strong financial wellbeing plans is good for business and supports preparing members for retirement.
6. Improve communication: 42% of employers do not promote the workplace pension as part of the recruitment and ongoing retention process. Creating a communication strategy will help support with employee engagement.
7. Supporting teams through the cost-of-living crisis: Along with remote and flexible working policies and mental health support, some employers are taking extra measures to support their employees through the cost-of-living crisis.

With rising financial stress, more employers are enhancing employee wellbeing by offering better workplace pensions and salary sacrifice options. At CLA Healthcare, we work with members to ensure full compliance and effective management of well-governed workplace pension schemes, including re-enrolment and clear communication of benefits.

For more insights on workplace pensions and the feedback of over 500 businesses, download our full report here.