Plan Sponsors Fail to Provide Flexible Savings Options
26 July 2012 (PLANSPONSOREurope.com) - Employees want more flexibility around their savings and pensions options but plan sponsors are not catering for their needs, according to data from Mercer.
The firm’s surveys of plan sponsors and employees show that although, on average, employees still rank pensions as the long-term savings vehicle they most value (58%), 21% would like to have the option of saving into cash accounts and 9% into corporate cash ISAs. The survey showed that very few plan sponsors offered alternative savings vehicles with only 2% offering cash savings plans and 2% corporate cash ISAs.
Gail Philippart, a Principal and DC expert in Mercer Retirement business, says: “Our surveys show a clear gap between what employees want and what employers are currently providing. Employees’ needs are evolving and will change as they progress through their working life. To become the employer of choice companies need to listen to what their staff need and meet those needs with benefits that are appropriate and will be valued by staff.
“Many employees in the generation now entering the work force are steeped in student debt, with little chance of getting on the housing ladder anytime soon. Offering them the choice of paying down student debt or saving for a deposit on a house through a savings option is an effective staff retention tool, and a great way of helping staff deal with their individual financial priorities.
“The nature of trust-based pension schemes means the approach is more paternalistic. However, there are now more ways to construct the financial elements of reward packages to ensure the needs of employees are met.”