Despite this, British business owners continue to treat pensions as a compliance exercise rather than a strategic part of their employee wellbeing and retention strategy. Over half of SMEs (53.6%) contribute only the legal minimum, and fewer than one in seven (14%) offer matched contributions. Meanwhile, almost half of employees (47%) say their own pension contributions are set at the statutory minimum, putting millions at risk of under-saving for retirement.
The findings come from Penfold’s ‘Retirement reality check’ report, based on surveys of 2,000 UK employees and 500 small and medium-sized businesses. The report highlights a clear mismatch between what employees value most and where employers tend to focus their benefits attention.
“Employers are already paying for one of the most powerful tools they have to support morale and retention, but many underestimate its impact,” says Chris Eastwood, CEO and co-founder at Penfold.
“At a time of rising living costs and economic uncertainty, employees are thinking much more carefully about their financial security. For many, their workplace pension is a signal of how seriously their employer takes their long-term wellbeing – not just today, but in the future. Yet for employers, this still sits firmly in the background, being viewed as a compliance requirement; important, but largely fixed.
“Our research shows that pensions influence how secure, committed and supported people feel at work, even if they’re not talked about day to day. That makes them one of the most important, and underused, tools employers already have.”
Other key findings from the report include
57% of employees say a pension is ‘very important’ when deciding to join a new company – more than any other benefit.
95% of employees say an employer contribution of 3-4% is not enough to make them stay
53% of employees say they would increase their pension contributions to around 12% of their salary on average if their employer matched what they put in.
Eastwood adds: “This isn’t just about retirement planning. Financial confidence plays a huge role in wellbeing and morale at work today. Yet more than half of employees don’t know the current value of their pension pot, and many don’t fully understand how their scheme works.
“Employers don’t need to become pension experts, but they do have an opportunity to make pensions clearer, more visible and more meaningful for their teams. Even without increasing contributions overnight, better communication and modern pension experiences can significantly increase the value employees feel they’re getting.”
Eastwood concludes: “When employees feel confident about their financial future, they’re more likely to stay, engage and commit. A better workplace pension strengthens retention without requiring a complete overhaul of existing benefits.”
To read the report in full, click here
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