Pensions are now less attractive to some employees than alternative saving options, according to delegates at Mercer’s latest pension forum events.
Employer-sponsored alternative savings plans are an additional way for employers to encourage employees to save, offering more flexibility than a conventional pension plan. Nearly a third of attendees expressed an interest in pursuing an alternative savings approach within the next two years. Nearly three-quarters, however, said that a minimum proportion of employer contributions towards employee savings should be allocated to pensions.
Tony Pugh, UK head of defined contribution pension services at Mercer, believes employers need to be prepared and aware that each employee has a different financial agenda. “Employers are starting to realise that the traditional reward packages do not always fulfil employee’s needs. Employees entering a job market straight out of university, for example, will have financial demands that take priority over saving for a pension. In an increasingly difficult recruitment environment, facilitating such alternative savings options can be both a great retention tool and a powerful weapon in the war for talent,” he said.