Employer engagement
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Benefits for employers of voluntary engagement
Our recent research has found that approximately half of all employers have some form of governance arrangement in place for their GPP. Benefits of such governance arrangements for employers of all sizes can include the following:
- Employer engagement can lead to a better quality arrangement and therefore mitigate against the risk that your scheme is perceived as poor quality which may reflect badly on you and may affect how easy it is for you to attract and retain staff.
- Increased engagement can save time and money by preventing problems that could be costly to put right. For example, if a provider is given incorrect payroll information about a member and this is not identified for some time, this could lead to contributions being paid at the wrong level. Such errors can be time consuming to put right.
- It can improve member understanding of, and confidence in, the pension offered and hence improve take-up and appreciation of the pension scheme by members.
- It can help prevent problems further down the line (eg investment performance, service standards). For example if the provider’s investment performance is consistently poor in relation to other providers over a long period and the employer has not been monitoring this or taking any action (eg raising the matter with the adviser or provider) this may create a source of friction between employees and you.
- It can provide members experiencing problems with a collective voice and be a focal point for employee involvement. For example, if a number of members are having problems with the provider’s administration, those involved in the governance arrangement can take them up on members’ behalf.
- DC schemes involve different risks for employees compared to DB schemes and the introduction of voluntary governance arrangements such as management committees may be one way you can help mitigate these risks, for example, by reviewing employees’ education and information requirements. Our recent research found that poor member understanding is perceived by those running DC schemes to be the most serious risk of such schemes.
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