SME employers are focusing on practical ways to support pension saving, particularly among younger and lower-paid workers, as financial pressures continue to influence saving behaviour, according to new research1 from People’s Pension.
With nearly three quarters (74%) of employers worried that employees are not saving enough for retirement, there is a clear focus on helping more people stay engaged with long-term saving.
Employers are particularly focused on supporting younger workers and low earners, with more than three quarters (77%) concerned these groups are more exposed to financial pressures and may be more likely to step back from saving as costs rise.
This is reflected in expected behaviours, with one third (32%) saying younger employees are most likely to opt out of workplace pensions. Employers point to affordability as the main reason for opting out (38%), although understanding (24%) and perceived value (18%) also play a role, reinforcing the importance of clear, accessible communication.
Employers call for more support to improve workers’ financial wellbeing
More than four in five SME decision-makers (82%) say they feel a responsibility for employees’ financial wellbeing, even as three quarters (75%) say rising business costs limit how much they can increase pay.
The findings come as many employers identify gaps in pension understanding and engagement. Nearly six in ten (59%) say employees do not fully understand the value of their pension, while more than half (52%) are concerned employees are not engaged or getting the most out of the scheme available to them.
Nearly half of employers (45%) say clearer communication and education about pensions would improve engagement, while 40% highlight the importance of additional support for financial wellbeing and retirement planning.
Stuart Reid, Distribution Director at People’s Partnership, said: “Employers are clearly focused on how they can support their workforce, particularly younger and lower-paid workers who are more exposed to financial pressure. As many households face renewed pressure on day-to-day finances, helping people stay engaged with long-term saving has become even more important.
“What this research highlights is the importance of communication and support in helping employees engage with their pension. Where understanding is lower, simple and accessible guidance can play an important role in helping people make informed decisions about their long-term finances.
“Even in a challenging environment, workplace pensions remain a key part of long-term financial planning. Supporting employees to stay engaged with saving, even at modest levels, can make a meaningful difference over time.”
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