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Recruitment and retention – how to make pensions pay

Matthew Doyle
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In 2016, employers contributed £42 billion[i] to UK workplace pension schemes.  A sum which is not inconsiderable and one that is only likely to increase as greater number of employees become automatically enrolled.  But apart from fulfilling your regulatory requirements, what is your company actually getting for your significant investment in the UK pensions industry? Article by Matthew Doyle, Managing Director of the Pensions Quality Mark (PQM).

This is not an unreasonable question – and one that you may ultimately be asked to answer by the finance director, chief executive officer or other member of the board, if you have not been asked already.  Firstly, a good pension offering aids recruitment.  More than four out of five (82%) employees say that they look at a company’s benefits package before signing on the dotted line and 72% say they are more likely to stay with a company that offers good benefits according to Jobsite research[ii].

While the concept of perks and benefits certainly cover the diverse offerings of Autotrader UK[iii] (a discounted wine club), Allen & Overy (on-site doctor and dentist) and Airbnb ($2,000 to spend on travel), more obvious and arguably accessible benefits are also popular.  Additional annual leave (52%), an enhanced pension scheme (48%) and flexible working (45%) were seen as ‘top benefits’ that employees would sacrifice a proportion of their salary to enjoy.

This data is good news for companies who offer competitive – and even imaginative – benefits but should be sobering news for those who have yet to grasp this opportunity.  Indeed, while employees are keen to understand the entire package that their role offers, only 34% of employers recognise benefits as an important recruitment tool and communicate accordingly.   Instead – based on a quick review of a couple of job boards – you might find that some companies still focus on a ‘fun’ environment and how ‘working here is an absolute laugh’[iv].

And then we come to the other – R – retention. Research from Oxford Economics suggests that it costs £30,000 to recruit an employee which is a significant figure but not entirely unreasonable when you consider the cost of lost output as they get up to speed and the actual cost of finding the right new recruit.  So it is quite obviously preferable to retain talent rather than go to the expense of regularly replace employees.

So how can retention and recruitment be made easier?  One approach is to clearly communicate the Employee Value Proposition (EVP) – i.e. characteristics and appeal of working for an organisation – and this includes the company’s pension provision.  However, encouraging discussion around pensions can be a challenge as naturally when a person starts a new role, they are more interested in understanding what is expected of them and mastering the basics like getting the printer to work, rather than understanding their potential retirement income.

While data suggests that automatic enrolment opt-out rates are low, the current average contribution to a workplace scheme is 4%.  This will need to increase in the future so to ensure that your employees continue to value and take advantage of your offering, it is more vital than ever to clearly communicate the benefits.

To aid this process, the Pensions Quality Mark (PQM) have identified some good communications rules which it will be launching in Autumn 2017.  These suggest that communication needs to be delivered in a timely manner which suits not only the employer but also the staff member.  It is certainly appropriate to provide people with the information on their pension when they start a role but when other events take place such as a salary increase or perhaps a work anniversary, then employees should be gently prompted.  This contact also needs to be regular as this not only reinforces the message but also takes into account the fact that different people are more open to listening to information at different times or when they are in different frames of mind.

In addition, company communication on pensions provision need to be complete and concise as the vast majority of people you are looking to reach are busy focusing on the immediate demands of their role, their personal lives and what they are having for lunch.  Gone are the days when companies could simply insert a 35 page pension document into the envelope with an employees pay slip and expect someone to read it.

While pensions and the rules that govern them can be complex, companies need to consider how they can reduce the amount of reading that staff members need to do in order to become active members of the pension scheme. The rise of social media and the advent of millennials in the workplace means that a multi-channel approach is expected and collateral like infographics as well as podcasts are valued.  The communication also needs to be relevant to the receiver which may mean segmenting your employee database rather than simply uploading all the information to the intranet and hoping that people will take the time to read it.

This is particularly important as if people are bombarded with irrelevant information, they will switch off and ignore vital communications or calls to action aimed at them.  That said, information does need to be repeated.  As politicians like Barak Obama and Martin Luther King illustrated during their electrifying speeches, a message repeated three times has more chance of being understood and listened to than one which is only expressed once – often in technical jargon.

The final rule of good communications when it comes to pensions is arguably the most challenging – revolution.  Don’t assume things are going to change just because people know they need to, you need to push for this change to happen and highlight how this change will benefit the organisation.  Revolution is relative.  Each organisation has a different appetite to risk so while a funky fin tech start up may be keen on an animated video to explain retirement saving, an actuarial firm may be more comfortable with a carefully thought out checklist.

Considering the scope and complexity of the issue, it can be tempting to look to your pension scheme provider to communicate with employees about their benefits.  However, companies that neglect to take an active role in the communications process are missing a trick and may well find their employees are not as engaged as they might hope as they are only likely to receive statutory communications.

Pensions are arguably one of the most expensive statutory benefits an organisation provides to using these simple communication tools, you are ideally positioned to improve retention and make recruitment easier.

Readers who might be interested in receiving a copy of the PQM Good Communications Guide when it launches in Autumn, can sign up to be notified at www.goodcommunicationsguide.com

[i] ONS, MQ5: Investment by Insurance Companies, Pension Funds and Trusts, Reference Tables, Q4 2016

[ii] https://www.recruitment-international.co.uk/blog/2016/11/work-slash-life-balance-benefits-key-to-employees-reveals-jobsite

[iii] http://www.independent.co.uk/news/business/news/google-asos-airbnb-20-best-perks-benefits-uk-employers-a6938716.html

[iv] http://www.gorkanajobs.co.uk/job/71011/rhizome-media-account-executive/?LinkSource=PromotedJob

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