Less than 20% of employers believe they are currently getting full value from the money they spend on employees' pensions, research by Watson Wyatt reveals.
The survey of more than 70 large UK private sector employers and 2000 employees of large UK firms found just 18% of employers felt they currently get full value from their pension benefit spend, while only 27% believed their employees understood the pension benefits they offered..
Watson Wyatt senior consultant Gary Smith said many employers needed to rethink their employee benefits strategy, focusing on retirement provision in particular.
He added: "In the current economic climate no company can afford to achieve a sub-optimal level of return on such a significant investment. It is unlikely that companies are going to be in a position to increase their overall benefit spend at present, so they should be focusing on making their current spend work harder.
"In many cases, this could be largely about raising awareness and understanding of the benefits on offer, but employers should also focus on better aligning the benefits they offer with what their employees actually want, need and value."
The report, entitled The Future of UK Retirement Savings found that employer-sponsored pensions and personal pensions remain the most important sources of retirement income for the majority of employees, with 68% of employees saying they will be either very or extremely important to their income in retirement.
Some 53% cited "other savings" as being very or extremely important, 49% property, 33% state benefits and 23% inheritance.
The report also revealed more than half of employers (58%) were concerned that their staff are not saving enough for retirement.
One in five (20%) said that continuing to work after retirement was going to be a very or extremely important source of income after retiring. Older workers are more likely to rely on the state and pensions, while younger workers are more likely to rely on non-pensions savings, property, inheritance and continued earnings.IFAonline
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