Flexibility in taking benefits should lead companies to consider starting pension schemes sooner, rather than waiting for the compulsion of 2012 – and if they already have a scheme, they should make sure their employees know all about it.
“Communications with members are key to unlocking one of the core benefits from the employers’ point of view,” said Jeremy Ward, head of corporate pensions strategy at Friends Provident. “Everyone appreciates a pension when they reach 65 but they may resent it during their working lives – some view their contributions as a kind of tax. We will provide the documents, communications and help to convince employees they are genuinely getting something of value.”
Friends Provident’s research has found that, in certain sectors of the economy, the most attractive benefit to employees that businesses want to attract and retain is a pension scheme. The more knowledgeable and sophisticated they are – and therefore more skilled – the more likely they are to have ambitions beyond the state pension.
“Communications are more than just words on a page. A business that wants to position itself as an employer of choice will provide a package of benefits, and many see pensions as part of that,” he said. A business may not wish to give out a message that they’re not an employer of choice but a default to the compulsory state scheme may give that impression.
Flexible retirement is becoming more usual and private pensions are key to that, too.
“Retirement is no longer a cliff-edge; it’s more a transition to a more flexible lifestyle,” said Ward. “A pension can help people to maybe work longer, but part-time, or change the nature of the work they do. Businesses can retain the services of valuable, experienced employees through flexible retirement. It keeps both sides happy.”