Occupational schemes provide ‘poor value’ for employers

Less than half of the industry thinks occupational pensions are seen by staff as their most important benefit, PP research reveals.

This week's Pensions Buzz revealed only 47% of respondents though pensions were seen as the most important benefit by workers, while 35% believed other employee benefits were valued more highly.

This echoes concerns raised last week by National Association of Pension Funds research showing only 28% of employees rated pensions their top benefit (PP Online, 22 September).

It is also borne out by the experiences of FirstGroup reward and pensions director John Chilman who told delegates at the PP Show that his firm spent too much on its open defined benefit scheme.

"The cost is a multiple of all the other benefits combined, but it doesn't help us recruit and retain people, so it is very poor value," he said.

On the other hand, Rexam head of pensions Terry Faulkner believes staff with DB pensions value them more highly than ever after high-profile campaigns to protect benefits at the BBC and in the public sector.

But he agrees defined contribution arrangements are a much less powerful incentive.

"It depends very much on contribution rates and on the hoops you have to go through to get a good rate," he said.