Most companies are not taking enough action to tackle the significant pensions inertia within their workforce, according to a survey by LifeSight.
The poll of 100 firms by Willis Towers Watson’s defined contribution (DC) master trust found most employees are remaining in the default funds or potentially missing out on matching employer contributions by only saving the default contribution rate.
Despite this, most firms are still failing to engage properly with employees, with 57% admitting their communications are not personalised for individuals. In addition, 37% of respondents said they have no current plans to have a greater role in their employees’ long-term savings.
Over savings priorities were the main reasons as to why employees do not save more into their pensions, with more than half of employers (56%) said saving money to buy a house or go on holiday was the biggest hurdle to their employees savings more.
A fifth blamed it on complexity and lack of understanding of the reward on offer, while 17% said it their employees could not afford it.
LifeSight head of proposition development David Bird said personalised communication could help tackle the inertia problem.
He added with the recent increase in the state retirement age to 68 brought forward by seven years to between 2037 and 2039, employees will have to be more proactive in saving if they want to retire well or earlier, and firms can do more to help. “Providing engaging online tools which make member’s saving decisions more relatable can help nudge them into action, for example by helping them understand how it impacts the age at which they can retire.“
His colleague, Willis Towers Watson line of business leader UK reward, talent, communication and change management Richard Veal, said there is no reason why the pensions industry should be lagging behind with outdated communication methods such as paper statements.
“By analysing behavioural patterns underpinning saving attitudes and strategies, using modern technology and making pensions more relatable, the industry can become better enablers of pension saving decisions.
“With their significant access to and influence over the UK’s workforce, employers can also play a crucial role in driving engagement and ultimately help guide their employees to financial security in retirement. Good communication with employees will be critical in overcoming the UK’s current pension paralysis.”
The survey results are based on responses of over 100 UK organisations who attended the annual Willis Towers Watson Pensions and Savings Annual Conference in May.