Tim Taylor, head of reward at Tui Travel, talks to Debi O’Donovan, editor of Employee Benefits, about the importance of pensions as an engagement tool and why HR should not shy away from pensions.
Taylor advises HR managers to get on top of the issue of pension plans’ default investment funds to give employees value for the future. He adds: “With the right advice, you can put in place a default fund that can meet the needs of your workforce.”
It is very important that HR people understand pensions; it is a major cost, a major benefit and a major risk for organisations. Where I disagree with Tim is on the issue of a default fund. There is no default fund that will be suitable for every employee or even for the majority of employees. Everyone has different approaches to risk, savings and levels of financial education. In the US we have seen class actions by employees against providers of default funds as either they have not performed as expected or were not suitable for some classes of employee.
On this issue HR is stuck between a rock and a hard place. We cannot offer financial advice, or anything that looks like financial advice (you can offer “information”) and providing workplace advice can prove to be expensive and there is always the issue of liability to consider as a risk factor. Pensions are a key tool in our engagement efforts as Tim rightly points out; but providing an appropriate framework is a major challenge.