Employers are re-evaluating HR strategies for better retirement outcomes.
- Research by REBA shows current pension contributions fall short of good outcomes.
- Nearly half of employers see pension challenges as immediate concerns.
- Chancellor’s review could speed up changes in pension strategies.
- Employers call for provider and consultant assistance in maximising support.
Employers are actively considering new strategies to ensure employees achieve adequate retirement outcomes. According to recent research by the Reward and Employee Benefit Association (REBA), there is a consensus that current pension contributions are inadequate for meeting future employee needs. The findings reveal that nearly half of the employers see this as an immediate issue to address, highlighting the urgency of the situation.
The announcement by Chancellor Rachel Reeves about a forthcoming review of Defined Contribution (DC) workplace pensions is expected to accelerate necessary changes, such as adjusting contribution rates. This review aligns with sentiments from 89% of survey respondents who indicated their likelihood to adopt new HR strategies within the next two years to tackle retirement adequacy.
In the current landscape, just over a third of employers offer pension contributions between the statutory minimum and nearly 5%. However, projections for 2026 reveal a shift in this trend, with almost 19% of employers planning to contribute 10% or more, marking a significant increase from the current rates.
Beyond increasing contributions, employers recognise the importance of educating employees about pensions. Engaging staff early and encouraging them to consider increasing their contributions are essential strategies to improve retirement outcomes. Nearly all employers aim to enhance the support they receive from pension providers, with 78% also valuing consultant input for crafting effective strategies.
Jo Gallacher, Content Director at REBA, underscores the importance of these efforts, stating that pensions are a priority for compensation and benefits professionals. Increased contributions, alongside improved guidance and education, are necessary to make meaningful progress. Ant Donaldson, Reward Manager at Wolseley, echoes this by highlighting the challenges posed by the cost-of-living crisis, which complicates employees’ ability to focus on long-term retirement savings.
Employers must re-evaluate HR strategies to secure better retirement outcomes for their workforce.
