3 November 2005 - Publication of DWP Research Report 294: Providing pensions information and advice in the workplace where there is little or no employer contribution
Today the Department for Work and Pensions published the findings of an evaluation of the effectiveness of four different ways of providing pensions information and advice in the workplace.
The research explored: the effects of the pilot options on the pension knowledge, attitudes, awareness and savings behaviour of employees; and the roles, experiences and views of participating employers, employees, pension providers and Independent Financial Advisers. The pilot was implemented specifically with employers who are offering no contribution, or one of less than three per cent of salary, for staff who join the Stakeholder Pension scheme set up by the company.
The methodology included quantitative surveys ‘before and after’ the interventions and analysis of pension providers’ administrative data; and qualitative research including depth interviews, focus groups, observations and informal consultation. The research was carried out on behalf of the Department for Work and Pensions by RS Consulting.
Main Findings:
- Overall, the evaluation identified no significant impact on pension knowledge or attitudes towards pensions. The pilot appeared to have no impact on surveyed employees’ attitudes towards the perceived security of pensions or their commitment to saving now.
- Recall of receiving written information was poor (just over half
of those surveyed) although the majority of these had read all or some of the
pilot Pension Information Pack. Under a third of surveyed employees recalled
the availability of the provider SHP literature and a minority had read it.
Employee apathy and significant logistical barriers faced by employers resulted in fewer presentations and one-to-one sessions being held than planned. - Examples of aspects that seemed beneficial to changes in attitudes, knowledge or saving behaviour among employees were: a positive employer attitude to pensions; personalised pension forecasts for employees; assistance in completing application forms; a presenter able to build rapport; and presentations tailored to the needs of the audience.
- There was a general view from pilot employers, providers, IFAs and employees that the workplace is an appropriate channel for communicating information about pensions. Providers and IFAs were most supportive of this with the caveat that without additional incentives for employees to save this method would not be effective and without additional fees to allow providers/IFAs to recover costs, nor would it be commercially viable to service this target group. Employers preferred a restricted role involving a paper based cascade of information only.
- Providers and IFAs felt that employer contributions were the key to success for the types of intervention tested. Most surveyed employees thought that their employer should contribute and claimed an employer contribution would act as a catalyst for action. The majority of employers were opposed to the idea on cost grounds, because they did not see employees’ pension arrangements as their responsibility, or because they did not believe there would be recruitment and retention benefits.
This evaluation has made very clear just how difficult a task is faced in trying to get these employees to engage with their provision for income in retirement. Equally, the evaluation has demonstrated how difficult a task in practice is faced in using the workplace among employers who offer no or low pension contributions.
Notes to editors
- The report is published on 3rd November 2005 by Corporate Document Services. The research was conducted on behalf of DWP by John Leston and Margaret Watmough from RS Consulting. The report is DWP Research Report No. 294. A free summary is available from Paul Noakes at the DWP Social Research Branch (Room 4-26a, Adelphi, 1-11 John Adam Street, London WC2N 6HT, 020 7962 8557). The report and summary are available free on the DWP website: http://www.dwp.gov.uk/asd/asd5
- The evaluation process has been comprehensive and detailed in approach, and has yielded a wealth of information and insight into the impact of the different Options and the implementation issues associated with them. Nevertheless, the effects observed in the evaluation findings cannot be projected to all employees of the 100 pilot employers, nor to the wider universe of employers with similar characteristics.
- The findings from this pilot conducted on a voluntary environment cannot be generalised to a potentially mandatory environment, the pilot and evaluation provide indicative findings that can inform policy decisions.
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Prepared by the Department for Work and Pensions Pensions Analysis
Directorate