Since our last Pensions Survey in 2019, the economy and the labour market have experienced rapid and significant change due to the unprecedented impact of the coronavirus pandemic.
And yet, despite the cash-flow pressures created by the pandemic, this survey shows that businesses continue to strongly believe in the moral and business case for providing competitive workplace pensions. Businesses continue to prioritise this vital workplace benefit and the long-term retirement needs of their people in the face of significant disruption.
The survey, conducted in June 2021 with 186 senior executives and 164 pension scheme managers, explores how the pandemic has influenced employers’ approach to pension schemes, as well as the impact of new regulations introduced by the Pensions Schemes Act 2021.
Despite the magnitude of the pandemic shock, employers are already looking ahead to the future and thinking about the role they can play in the provision of competitive workplace pensions.
- Most employers (86%) overwhelmingly continue to see a strong business case for providing competitive workplace pensions, with the same proportion believing that they have a moral obligation to help staff to save for retirement.
- The majority (76%) of senior executives who responded believe that contribution rates higher than the current 8% statutory minimum will be required in future to ensure that employees have sufficient retirement income.
- But there are much higher levels of business support for raising minimum automatic enrolment contribution levels over a five-year period (78%) rather than over the next two years (47%).
- In the meantime, more than 7 in 10 employers (74%) believe that business should do more to inform staff about saving for retirement. 87% of respondents also said Government should prioritise educating people about the importance of pensions over the next two years.
- When it comes to Environmental Social Governance (ESG), a net balance of businesses with both DB schemes (76%) and those with DC schemes (65%) think that Taskforce on Climate-related Financial Disclosure-aligned reporting will deliver one or more benefits in the future such as increased engagement with staff.
- But action lags behind aspiration because understanding is low. Employers think that the new requirements are well understood by just 5% of employers and 8% of trustees.
- 65% of employers offering DB schemes believe that over the next two years, the Government should prioritise supporting them to grow their business as they work to meet pension scheme costs, for example, by minimising the cumulative regulatory burden.