Pensions auto-enrolment could be the worst employee engagement disaster in recent years. Those of you who know me will realise I am not inclined to tabloid-style, shock-horror scare stories, so let me explain my thinking.
We have gone through several years of below-inflation pay increases, if not pay freezes, which are effectively pay cuts. Then along comes pensions auto-enrolment and employers are forced to make deductions from pay. If the benefits for staff are not understood, those struggling financially will see this as another kick in the teeth, causing anger and a plunge in engagement.
Of course, I am not referring to the good employers who are working on auto-enrolment engagement communications, but the vast majority out there for whom auto-enrolment is an inconvenient cost. I know many pensions and benefits managers who are battling with their HR directors, finance directors and chief executives as these top-level folk question why they should do anything more than the minimum in the hope that most staff will opt out.
Our cover story spells out the hard business reasons why the anti-pension brigade need a rethink. The inability to force people to retire, coupled with the fact some will be unable to afford to retire, will have a big impact on workforce planning, affecting productivity and the bottom line. Workforces will age, creating a glut of older workers that prohibits employers from recruiting new talent. Future succession strategies will no longer have defined timelines, which will make it difficult to retain talented staff.
We are beginning to see the first tribunals and court cases arising when employers try to retire older staff and said staff resist. It is predicted that these will escalate, driving up legal costs for employers. Tom Jackman, a solicitor at Sackers, points out in our cover story that there are European cases where employers have tried to objectively justify getting rid of employees at a particular age, and in some of those cases the court has referred to the pension provision available to employees. But will all employers be able to use this defence?
Benefits managers must engage their bosses to explain why excellent communications on all pensions will be cheaper in the medium to long term than the alternative, which is falling engagement, increasing legal cases and lost talent. No business can afford that.
Debi O’Donovan, Editor, Employee Benefits
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