Pensions are employers most useful tool in attracting staff, research shows   

A survey of 2,000 employees and 500 small and medium-sized enterprises (SMEs) suggests that pensions are employers’ most useful talent recruitment and retention tool, putting them ahead of other benefits like holidays, maternity/paternity leave and life/health insurance.

Just two-thirds (66%) stated that generous maternity/paternity leave was crucial while the same proportion said health insurance or life insurance would attract employees and retain them. 60% of those surveyed said it was unlimited holiday while 56% said childcare support. Just 34% said a gym membership.

The research, conducted by pensions platform Penfold, showed that financial benefits like salary advances scored 65%, while bonus schemes scored higher, at 74%.

However, despite the value placed on pensions by employees, SME employers continue to prioritise alternative employee benefits: 

59% of SMEs said that travel assistance (like subsidising season tickets) was more important than pensions , 55% prioritised work socials, 50% prioritised wellbeing support. 50% ranked salary advances above pensions, while the same proportion also prioritised bonus schemes.

When asked what level of contribution from their employer would positively impact an employee’s decision to stay with the business, the average answer was 9.5%.

Just 5% of employees said an employer contribution of 3-4% of their salary was enough to increase their likelihood of staying in the company.

 In contrast, this was the most popular contribution level for SMEs, with 54% saying they offered the minimum employer contribution of 3% under auto-enrolment.  

The most popular level of employer contribution that would retain staff was between 8-10%, while 16% said an employer contribution of between 5-7% would encourage them to stay with their current employer.  

The study said the statistics “clearly show a significant mismatch between the views of employees and employers on the importance of different benefits”, and in a challenging jobs market, “the value of pensions should not be understated”.

Chris Eastwood, Co-Founder at Penfold, said: “Whilst it is not altogether surprising, we are highly concerned to see such a stark divide between the attitudes of employers and employees towards pensions. We hope that today’s research sparks conversations across the UK to foster a more cohesive approach towards financial support.

“The cost-of-living crisis means it is more important than ever that firms are aware and supportive of their team’s financial needs – we urge all employers to assess whether their current pension scheme aligns with short-term economic challenges and long-term financial objectives.”