Employees want more flexibility around their savings and pensions options, but employers are not catering for their needs, according to research by Mercer.
Its research, which analysed the defined contribution (DC) pension schemes of more than 300 UK organisations, found that, on average, 58% of employee respondents ranked pensions as the long-term savings vehicle they most value, while 21% said they would like to have the option of saving into cash accounts and 9% into corporate individual savings accounts (Isas).
Among employer respondents, 2% offer cash savings plans and 2% offer corporate Isas.
Among employee respondents, the cash savings option was most popular among younger staff, with 32% of those aged between 16 and 24 favouring it, and 28% of those aged between 25 and 34.
Pensions were named the savings vehicle of choice among employee respondents closer to retirement, with 65% of those aged between 45 and 54 favouring it, and 69% of those aged between 55 and 64.
The research also found:
- 47% of employee respondents would like their employer to take a facilitative approach, giving them the choice and flexibility to select their own benefits.
- 26% expect their employers to take on a paternalistic role.
- 27% expect their employers to provide the bare essentials, through a compliant approach.
Gail Philippart, a principal and DC expert in Mercer’s retirement business, said: “Our surveys show a clear gap between what employees want and what employers are currently providing.
“Employees’ needs are evolving and will change as they progress through their working life. Many employees in the generation now entering the workforce are steeped in student debt, with little chance of getting on the housing ladder anytime soon.
“Offering them the choice of paying down student debt or saving for a deposit on a house through a savings option is an effective staff retention tool, and a great way of helping staff deal with their individual financial priorities.
“Pensions should still be the key savings tool for retirement, and the fact that such a large proportion of employees highly value their schemes is encouraging to see.
“However employees also want something that will help them with their short- and medium-term savings needs and feel there would be advantage in this being available through the workplace.”
Read more articles on workplace savings and pensions