Irish businesses need to make pension benefits clearer to their employees if they want to get the most out of their investment, a new survey has claimed.
The PricewaterhouseCoopers' Pension Survey found that there was a link between the level of understanding of pension arrangements and the motivation and retention of key employees. Of the companies that actively discussed their pension arrangements, 43 per cent of firms felt there was significant appreciation of the employers' contribution, compared to 9 per cent for those where discussion was limited.
"Irish employers contribute some €1.5 billion each year to fund pension schemes and pensions are an expensive element of the total reward package. However, our survey reveals that the pension benefits are often misunderstood and undervalued. There are clear costs attributable to poor communication and Irish business needs to target those areas of lost value," said Alan Bigley, Pension Advisory Partner with PwC.
Pensions schemes are also undergoing some changes, with efforts to modernise them to make them a more effective part of the employment package. According to the PwC survey, 73 per cent of defined benefit schemes and 48 per cent of defined contribution schemes are experiencing some level of change, or plan to do so in the future.
"Pensions are an important part of the reward package and are becoming more important in the recruitment and retention of staff," said Bigley. "Many companies are beginning to talk about possible radical changes to modernise their pension provision to fit in appropriately with the desired overall employment deal."
Some 40 per cent of HR personnel said over the past three years, the pension scheme has become a more significant element in attracting executive staff.
The survey also identified key risks for pensions, including investment underperformance, changes in pension regulation, inadequate pensions, and regulatory and compliance.
