Earlier in the summer, our pensions team hosted an online discussion forum with the Institute and Faculty of Advocates and Scottish Financial Enterprise, sharing thoughts on how the industry might bounce back from the impact of the Covid-19 pandemic.

Part of the session focussed on research we had conducted pre-pandemic, which explored how employers might use pensions as a positive tool for employee attraction, engagement and retention. Given the impact of the pandemic on the job market and the difficulties faced by employers looking to attract top talent to fill gaps in their workforce, attendees were very interested to hear how pensions can help businesses in achieving their objectives.

Unfortunately, the pandemic has pushed pensions back down the priority list for many businesses – the ability to offer an attractive pensions package may seem like an unaffordable luxury right now, and employee engagement on pensions more of a “nice to have” than a pressing concern. But pensions don’t need to be another problem to solve, instead they could (and should) represent a solution.

In this jobseekers’ market employees are looking for many things from their employers. Pay is an obvious draw, but are dramatically increased salaries sustainable long term? Flexibility has become particularly important since lockdown triggered a major shift in working patterns. But not all employers are enthusiastic about their staff working from home or can’t afford to see expensive office space going unused.

Pensions might well be a way to stand out from a crowded market, as a more cost-effective way of offering employees something more. In addition, a more generous pensions package will result in employees who are better equipped to meet the financial challenges of retirement. Having employees who are confident that they can afford to retire creates more opportunities for new staff to develop and progress, again making the business more attractive to potential recruits.

Even if it weren’t for the current state of the employment market, now would be a great time for businesses to start thinking about how they might make better use of pensions. The introduction of pensions dashboards will create far more visibility of the value (or lack of value) that employees are getting from their pension arrangements – and will make it far easier to draw comparisons with the arrangements of friends or family. In addition, the development of collective defined contribution schemes means there might finally be a middle ground between basic workplace pension schemes and the final salary or career average schemes that are prohibitively costly for many employers.

They say that adversity breeds innovation. These difficult times might provide the perfect conditions for employers looking to stand out from the crowd with innovative pension arrangements.

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