Companies are prioritising retirement provisions
Employers are willing to spend a significant amount of time and money (well beyond the statutory minimum) on retirement provision in the belief that it is a key part of overall remuneration. None of the companies we spoke with had a strict global policy of doing just the minimum required when it comes to retirement provision.
Unaffordable liabilities are top of mind
What employers want to avoid are the financial risks and legacy liabilities that are often created with retirement provision. Pension costs and the risk of unaffordable liabilities are still seen as major challenges, as they were in our 2014 survey. Companies feel the impact in financial reporting, M&A activity, dividend payments and debt levels.
Companies are helping employees save
To prevent a future crisis, employers are taking actions to assist today’s employees to save for retirement as well as managing employer-provided retirement provisions. However, most are not sure how to do both in a comprehensive and coordinated way that meets the company’s overall pension funding strategy.
Data analysis and investigation
Most companies doubt whether their advisers fully understand the unique requirements of their business and therefore whether they are adding sufficient value. Such doubts should lead to a “question everything” approach to all adviser spending: only holistic advice that looks at the entire retirement picture in the context of the overall business strategy provides real value.
Governance must be improved
Plan governance is not always where it should be and many employers feel that more needs to be done in this area to avoid any internal conflicts and legal or regulatory problems. A keen focus on the overall objectives of the company for its retirement provision means there is no one-size-fits-all approach for the right governance. Central will be the nature of the business and how labour-intensive it is or has been in the past.