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Welcome to the latest edition of the Drewberry™ Workplace Pensions Survey. We’re excited to share the results for 2024 with you. There’s plenty to dive into, and we’ve uncovered some fascinating insights into what really matters to people about their pensions.
As specialists in employee benefits, our goal was to understand what drives people’s choices. We last conducted this survey in 2022, and this time, we’ve gathered perspectives from 958 working-age professionals across the UK. Let’s explore what we found!
We asked employees about their retirement plans, their current company scheme, and if they really understand the world of pensions. Here’s what we found.
The good news is that 92% of employees are opted in to their workplace pension. This is a 5% increase from our last survey in 2022. However, it seems that there is a gap in knowledge when it comes to really understanding workplace pensions and how they work.
Majority Of Employees Are Opted Into Their Workplace Pension | |
|---|---|
✅ | ❌ | Employees Don’t Truly Understand Pensions |
😮 | 🤷♀️ |
💰 | 🤔 |
While 62% said they have a basic understanding of how pensions work, 19% said they either have little or no knowledge about them.
Interesting Stat 🤔
Although the majority of employees say they have a basic understanding of pensions, 25% don’t know who provides their workplace pension.
Despite their suggested understanding of pensions, 60% of employees don’t know how much they need to save for a comfortable retirement.
Of the 40% who said they did understand how much they need to save, 13% didn’t know how they would achieve it.
Interestingly, despite not knowing how much they needed to save for retirement, 69% of employees said they were happy with their current level of contribution. 1 in 5, however, said that they don’t feel that they’re contributing enough.
63% of employees plan to fund their retirement using pensions from their previous jobs, and worryingly, 15% are relying on a state pension.
If employees don’t know how much they need to save for retirement, how can they be sure their workplace pensions will be enough? The truth is, they can’t. This uncertainty puts them at risk of not being able to enjoy the retirement they’ve always dreamed of.
It’s not just a lack of understanding of how much they need to save, the data suggests there is a general lack of understanding when it comes to workplace pensions in general.
Employees Don’t Understand Their Current Workplace Pension | |
|---|---|
😬 | |
🤷♂️ | 🤔 |
When asked “Do you understand how your current workplace pension scheme works?”, only 24% of employees said that they fully understood.
Continuing on from the above, it’s no surprise that 56% of workers said they aren’t sure whether their employer offers salary sacrifice pension options.
A further 56% either haven’t heard of salary sacrifice, or don’t understand how it works.
Salary sacrifice pensions are a great way for employees to boost their retirement savings, as well as saving on your employer National Insurance contributions.
Many employers match contributions or even offer a fixed rate that’s above the minimum, and in some cases it can even boost take-home pay.
Michael Cairns-Marshall
Consultant, Employee Benefits
It’s not just salary sacrifice that employees don’t understand either. Despite pension tax relief being one of the most valuable benefits employees will get from the government, 40% don’t understand it.
When asked “Would you know how to access / find out about your company pension?”, 24% of employees said they wouldn’t know how to or would need assistance from their employer.
There’s clearly work to be done to bring employees pension knowledge up to standard. And while retirement might feel a long way off to many employees, you have a unique opportunity as an employer to help them prioritise their financial future.
The years pass quickly, and building a substantial nest egg becomes increasingly challenging as time goes on. Simply sharing the facts about your company scheme isn’t enough. You need to create a personalised experience that makes employees understand the very real impact that today’s choices will have on their future.
Longer lifespans – coupled with the cost of living crisis – could see pension savings stretched as employees head towards retirement.
Despite this, Open Access Government reported that savers are losing track of their pension pots as they move between jobs, with the value of lost pots reaching £26.6 billion.
Richard Noble
Senior Consultant, Employee Benefits
🎶 We want pensions education 🎶 (sorry, Pink Floyd). Although there is a knowledge gap when it comes to employees and their workplace pension, the good news is they want to educate themselves…with the help of their employer.
Employees Want To Bridge Their Pension Knowledge Gap | |
|---|---|
👨🏫 | |
👀 | 👩💻 |
When asked whether their employer could do more to educate them on their pension, 22% agreed, saying they aren’t clued up at all.
So what education do employees want? We asked “If your employer provided education, what areas of pensions would interest you?”. The top three areas were:
When asked how they’d like to receive pension communications, the majority said they’d like employers to provide education via financial adviser (37%). This was followed by:
Although there is some confusion about how schemes work and how much is needed for retirement, it’s clear that pensions are something that employees truly value as a benefit.
What Do Employees Think Of Their Current Workplace Pension? | |
|---|---|
🆙 | ⚖️ |
👯♀️ | 🌍 |
🔎 | 👋 |
Employees value workplace pensions and want employers to help them boost their retirement fund. 84% of workers said they want their employer to pay more than the statutory minimum contribution.
Enhanced pension contributions were third on employees’ wish list when it comes to the benefits they want. So it’s no surprise that the majority of employees would take a bigger pension and have fewer company benefits.
When asked “Would you prefer higher employer pension contributions to other company benefits?”:
Interestingly, employees said that if their employer paid more into their contributions, they would too. This just goes to show the influence you can have as an employer.
It’s clear that workplace pensions are a highly valued benefit among employees. But it’s not just about the size of the contributions—they also care deeply about how their money is being invested.
Ethical workplace pensions resonate strongly with employees, offering them the chance to align their investments with their personal values. In fact, 73% of workers want their pension pot to be invested ethically.
This shows a growing trend where employees are looking beyond the numbers, seeking a meaningful and responsible approach to their retirement savings. Employees want to know that their money is being invested in the right way.
When asked how important a potential employer’s pension would be to jobseekers, 86% said it was either “fairly important” or “very important”.
As an employer, it’s important to pay attention to the value employees place on workplace pensions. If not, you could find yourself saying goodbye to your top talent.
26% said that better pensions and financial advice would be enough for them to ditch their current job for a new one.
The key takeaway is that employees want more from you when it comes to retirement. The statutory minimum contribution isn’t cutting it, and it could even be worth redistributing your benefits budget to provide bigger pension pots.
A great pension is a huge factor in employee morale, demonstrating your commitment to employees’ long-term financial security. It also gives your employer brand a boost, making your business more attractive to potential hires, customers, and investors.
The secret’s out: employees value their pension, but they want you to help them understand more about retirement savings. More knowledge means your team can make informed decisions about their retirement savings, empowering them to take control of their financial future.
Understanding exactly what employees want will make it much easier for you to provide educational materials that are engaging and useful. Plus, if they’re well-informed about their pension options, they’re more likely to take full advantage of the benefits available to them.
Pension-savvy employees can be significantly less stressed, which, as found in our Employee Satisfaction Survey, is a major source of stress among UK employees. By investing in pension education, you’re not just supporting your employees’ future, but also fostering a more focused and efficient workforce.
Regularly reviewing your workplace pension not only keeps you compliant but also ensures you’re getting the best returns for your employees. For example, switching providers can lead to lower annual management charges and bigger savings pots for your team.
But setting up and maintaining a competitive workplace pension requires a decent bit of admin, so it quickly becomes time consuming. We do the heavy lifting for you, giving you more time to focus on what matters. Give us a call on 02084327333, or email help@drewberry.co.uk to get started.
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