Can increasing my company’s pension contributions really help retain and attract talented workers?
Whilst auto enrolment legislation means there are minimum contributions that you as an employer, will need to put towards your workplace pension scheme, a bargaining chip for you could be how much more, over and above the legal requirements, you are willing to offer. We explore the benefits of doing this.
Make long-term investments in your workers
Many employers opt to pay more than the legal minimum because it is widely acknowledged that in reality the minimum is not enough to retire on comfortably. Research by the Pensions Policy Institute (PPI) suggests that a combined pension contribution of 12% total contribution made up by the employee and employer, is a more realistic amount.
Offering a good company pension is a sign that you are prepared to make a long-term investment in your workers, and offering higher pension contributions can certainly help show your dedication to securing their financial futures in retirement which in turn could help attract and retain staff. Moreover, a high turnover in workers could be costlier to you than paying in more pensions contributions to your employees. Not to mention an easy way to improve your worker attrition levels!
Communicate workplace pension guidance to your workers
Communicating information about your workplace pension will ensure that your workers feel they are included and actively engaged with their workplace pension savings. Workplace pensions are not always the easiest of topics to navigate, so your workers will really value information about their retirement options or being able to access up-to-date information about the value of their funds.
Thanks to online platforms that outline a range of savings products and provide financial education resources such as those offered by NOW: Pensions, even the smallest of companies can communicate effectively and informatively to their employees.
Manage your contributions
Increasing your contributions, or the proportion workers’ salaries on which contributions are paid, will cost you more. But costs can be limited if you stagger these benefits, allowing workers to accrue additional pension entitlement for longer service. Similar worker benefit schemes exist when it comes to holiday pay, and are a simple and useful tool to help reward and retain key workers.
You could also consider matching contributions. Rather than pay higher contribution levels across your business, you only contribute more when your workers do. This could encourage workers to be more in control of their savings and ultimately invest more of their salary into their workplace pensions.
Higher contributions might just be too untenable for your small business, but you can still help your workers by providing them with guidance and support around workplace pensions. Your workplace pension scheme provider should be able to help you answer your workers’ questions, providing you with easy to read guides. Your workers will appreciate even a basic level of engagement with their pensions.
There is a huge opportunity for you to stand out from your competitors by simply offering more than the basic workplace pension contributions to your workers.