Companies in the UK are fundamentally changing their workplace pension schemes to suit the increasing number of millennials in the workforce, according to research by Aegon UK.
A survey of 500 UK businesses has revealed that almost 90 per cent (87%) have recently made significant changes to their scheme, specifically to suit those aged between 16 and 35, often referred to as the millennial generation.
Over a quarter (26%) have introduced a more rewarding overall pension scheme to attract and retain young talent, while 23% have adopted digital tools to help young employees manage their contributions. One in five (18%) now provide rewards when individuals increase their personal pension contributions, while a further 15% have broadened the pension options on offer to provide greater flexibility. This move to digital is highlighted by the fact just 4% have ramped up face-to-face or telephone advice in the workplace to suit these younger workers.
The introduction of auto-enrolment has been a key driver of change. More than two thirds (68%) of those responsible for the workplace pension feel a greater duty of care for their employees now that they are obligated to organise a pension scheme on their behalf.
With more than one in five (23%) businesses introducing digital pension tools to suit a new generation of workers, the workplace pension landscape is radically changing, but seemingly not fast enough. Nearly twice as many employers, two in five (39%), believe this millennial cohort would favour digital tools above all other mediums to monitor and communicate with them about their pension.
Despite the move to digital, print reminders (22%) and regular meetings (22%) are still popular for employers, with those responsible for their companies’ workplace pension scheme believing staff would prefer monthly letters or pay slips. One in ten (12%) believe staff still appreciate communications through annual statements.
Angela Seymour-Jackson, Managing Director of Workplace Solutions at Aegon UK said:
“We’re now in the digital age, where millennials account for a growing percentage of the workforce. Latest ONS statistics show those between the ages of 16 and 35 make up over a quarter of the UK population and are set to play a prominent role in the workforce. These millennials are turning to workplace pensions more than ever. More workers aged 22 to 29 have signed up for a workplace pension since 2013 than any other age group. They account for a significant section of the workforce and it’s encouraging to see businesses adapting to meet their changing needs, alongside those of other generations.
“Auto-enrolment aims to encourage a change in attitude towards saving for the future, and for the younger generation, digital tools are essential to interact with their pension in a way that suits their lifestyle. Traditional methods of engagement are slowly losing their appeal, so it’s refreshing to see UK businesses increasingly taking responsibility for the finances of their younger workforce. These younger employees are less likely to expect a job for life and turnover rates are predicted to rise from 14.6 to 18 per cent by 2018. As a result employers need to think how they can reward and retain talent and pensions are a part of this.”