11 October 2005 - Publication Of DWP Research Report No. 266: Micro-Employers’ Attitudes Towards Pensions For Themselves And For Their Employees
Today the Department for Work and Pensions publishes the findings of a small-scale qualitative study looking at attitudes towards retirement saving amongst micro-employers (employers with fewer than five members of staff).
The aims of the research were exploratory: to draw a picture of the views of these micro-employers towards pensions, both for themselves and for their members of staff; and to assess their views on the likely impact of any measures aimed at raising awareness and understanding of pension issues. This report is indicative of the views of these micro-employers but not representative of the full range of views that may be held by this group at large.
Eight discussion groups were held with micro-employers from three business sectors, delivered proportionally across four geographical locations. The research was conducted on behalf of DWP by James Noble, with recruitment of participants by MORI.
Main Findings
Micro-employers’ views on saving for their own retirement
Amongst participants the notion of saving for retirement was a familiar one and was generally well received. However, the options for doing so were met with some difference of opinion. Concerns about the reliability and return of pension options were high while trust in providers was low. Credibility of pensions was considered to be lacking by both high and low income participants.
The level and type of saving and investment plans held by individual employers varied greatly. Influencing factors included: experience of saving; age; age of the business; and profit levels. Participants were averse to what they perceived as handing over control of their money preferring the autonomy and flexibility to remove and re-invest funds when necessary. This fuelled their apparent ideal that investing in property or the business itself was the most appropriate option in terms of profitability, security and accessibility.
However, there was no evidence that these attitudes were causing participants to withdraw from or close existing pension funds. Participants appeared to recognise the need for having a range of options.
Micro-employers’ attitudes towards pension provision for their staff
There was little evidence of participants providing workplace pension provision, information or guidance for their staff. Pensions for staff had, in general, not been considered. Little benefit was seen in offering pensions provision or guidance to short-term staff, since these tended to be considered outside their remit. Their view was that if staff wanted to save their preference would be for higher wages and a choice of how and where to invest.
The merit of offering pensions or pension guidance was more positive when micro-employers were asked to consider long-term members of staff. However, micro-employers projected their own need for autonomy and control over their finances on to their employees, believing it was not their place to interfere and that this view was shared by employees. Participants questioned the relevance of pensions to their employees where wages are low and whether recruitment and retention benefits were relevant to micro-employers.
Views on potential improvements to pensions engagement through workplace information
Participants anticipated limited impact from the provision of workplace information on pensions. Whilst some employers saw the merit of raising awareness, a common view was that barriers to pension savings (e.g. perceived lack of credibility and lack of disposable income to invest) were more important obstacles. There was some willingness to act as a conduit for information, passing on leaflets and packs, but seminars and one-to-one discussions were met with concerns about time out of the business and the relative value due to anticipated low take-up.
Views on other options for improving pensions saving
Participants’ views on improving pensions saving among their employees were charged by their personal views of the pension system and desire to limit the consequences for them as employers. Participants saw the need for quite bold changes to the system: clear and transparent saving schemes; a guaranteed return; more reassurances from Government and providers; and provision of incentives and rewards to encourage saving. Financial education from an early age was seen as a way to inform saving behaviour throughout working life. The participants believed their employees shared their own desire for greater control and ownership over pension funds.
Notes for editors
- The report is published on 11 October 2005 by Corporate Document Services. The research was conducted on behalf of DWP by James Noble. The report is DWP Research Report No. 266. 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