The number of companies offering employees flexibility in use of pension contributions is set to triple over the next two years, Willis Towers Watson (WTW) says.
The consultant's 2018 UK pension strategy survey, published this month, surveyed nearly 200 organisations - finding that, while just one in ten (9%) of the organisations were currently providing all employees with the ability to use their pension contributions for other financial priorities, three in ten (29%) said they will provide the opportunity within the next two years.
It said the expected increase is most prominent in large organisations with more than 5,000 employees, which could see a rise from 6% to 38% offering this greater flexibility. A rise from 11% to 32% offering greater flexibility is expected in organisations with 1,000 to 4,999 employees; and the flexibility in organisations with less than 1,000 employees is set to double from 8% to 19%.
The challenge of cost control remains significant however. Although nearly half (47%) of organisations saw increasing employees' benefit choices or enhancing financial wellbeing programmes as a top priority, 40% said they need to maintain the current level of spending on benefits and retirement provision.
In a statement, WTW director of wealth and workplace savings Minh Tran said: "While managing cost remains a key influence, organisations of all sizes are increasingly willing to embrace new ways of structuring and delivering benefits.
"Employers seem increasingly keen to view retirement savings less as a stand-alone issue, and more as an integral part of their employees' wider financial planning and wellbeing, and are exploring new ways of delivering this support."
Offering employees this flexibility suggests "employers are not looking at pension plans as the only vehicle for retirement" as Tran explained.
Three in ten of the organisations surveyed saw increasing the range of choice in relation to wider benefits for their employees as a top priority over the coming years, with 33% prioritising adding to their existing financial wellbeing programmes.
The younger generation are the least engaged in their pension and retirement savings and creating an opportunity for employees to have more freedom with their savings will help this.
Tran told PP: "We keep consistently hearing younger employees do not engage with their pension, even with generous offers. Saving for retirement for the under 40's consistently comes down at the bottom for priorities, with things like saving for housing a main priority."
He continued: "For the younger generation, things like student debt is an example of the immediate challenges and financial priorities, as well as building an emergency fund and saving a deposit for a house. Employers must consider how they address these challenges alongside longer-term savings."
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