Cost control is employers’ biggest barrier to offering their employees flexibility with their pension savings, according to Willis Towers Watson (WTW) research.
The group’s 2018 UK Pension Strategy Survey, comprised of nearly 200 organisations, found that 40 per cent of employers say they need to maintain “current level of spend” on benefits or retirement provision over the next three years, despite 47 per cent seeing it as a priority.
However, employers offering their employees flexibility with their pension savings is set to triple over the next two years, after it found that just 9 per cent of companies allow their employees to use their pension contributions for other financial products, rising to 29 per cent.
WTW director of wealth and workplace savings, Minh Tran, said: “The picture emerging from this research is one of significant flux both in workplace retirement provision, and in the wider employee benefits package. While managing cost remains a key influence, organisations of all sizes are increasingly willing to embrace new ways of structuring and delivering benefits.
“Employers appear increasingly keen to view retirement saving less as a stand-alone issue, and more as an integral part of their employees’ wider financial planning and wellbeing, and are exploring new ways of delivering this support.”
Some initiatives have been gaining traction, earlier this month Nest Insight launched its sidecar savings trial, with Timpson named as the first employer to pilot the savings model from the start of 2019.
In January, Saga launched a similar savings scheme to sit alongside its pension scheme, agreeing to match the employee’s saving contributions up to 10 per cent.
According to the research, 31 per cent of organisations see offering wider benefits to employees a top priority over the next three years, with large companies prioritising financial wellbeing, medium companies focusing on maintaining benefit spending and smaller companies maintaining “retirement specific employee support”.
Currently, 6 per cent of employers with over 5,000 employees offer flexibility, set to rise to 38 per cent, while medium size businesses offering flexibility will increase from 11 per cent to 32 per cent and small employers from 8 per cent to 19 per cent.
Speaking at the launch of Nest Insight’s sidecar trial, Pensions Minister Guy Opperman put “pressure” on the financial services industry to do more to ensure the financial wellbeing of their employees.
He said that he cannot fulfil his role as financial inclusion minister without organisations getting on board with initiatives such as the sidecar trial and mid-life MOTs.