A SIGNIFICANT proportion of large employers take little interest in their pension schemes or their employees' health and fitness, despite the scrapping of compulsory retirement, a survey found.
Only one company in five in Scotland is offering staff "salary sacrifice" to boost their pension contributions whilst saving on national insurance, and only 23% give employees any help with buying their annuity on retirement, according to the survey by employee benefits group JLT, which employs 200 in Scotland.
JLT warns that without more proactive help from employers, over-65s will "retire on the job, turning up at the office every day just because they can't afford to leave, and the employer can't push them out".
The '250Club' regular survey covers mainly private sector employers UK-wide, with over 500 staff, half of them employing more than 3000, and up to 15% of them are in Scotland. It paints a worrying picture of how employers will cope with automatic enrolment into a pension at work, already under way for the largest firms and covering all firms with 60 or more staff by this time next year, and the rest by 2017.
Over 40% of even large companies do not allocate any time or resource to overseeing their pensions, and a similar proportion do not monitor their funds' performance. Yet 70% of firms agree that well-run schemes improve outcomes for both businesses and members.
John Wilson, JLT's head of research, who is based in Edinburgh, said many companies still had a "massive millstone" of final salary pension obligations, hampering their attention to the defined contribution (DC) schemes which most employees are now in.
He said: "Less than half of employers are doing salary sacrifice. One would expect that to be much higher, especially as it is one of the main strategies for offsetting the cost of implementing auto-enrolment and it is only 22% across Scottish respondents."
On what forms of advice on overseeing their pension arrangements firms would be willing to pay for, 22% said none, 19% didn't know, and 6% said only advice with a business benefit. Various initiatives are under way to promote shopping around for an annuity on retirement, yet most companies give their employees no help, Mr Wilson said. "You can improve income by 30%, or even more with an enhanced annuity for someone with a medical condition. Less than a quarter of firms are saying they have a specific strategy to help people get the most out of their pot at retirement, yet that is every bit as important as the pension."
The evidence will add to pressures on the industry to make shopping around for an annuity a "mandatory feature of workplace pensions", Mr Wilson said.
Asked whether it was important to have a programme to help employees keep healthy, only 54% of firms said it was important and 42% had no programme or didn't know if they had one. Three-quarters of firms, however, said they would be likely to implement a well-being programme if it showed a return on investment.
Mr Wilson commented: "Employers can no longer force people out of the door at 65. But working past retirement age only works if employees can be kept fit and well and productive....employers can't wash their hands just because they have moved to DC pensions, because people won't be able to afford to retire."
He said latest calculations showed that on current typical pension contribution rates, people would have to work into their mid-seventies to retire on a comfortable income.
A report last week by the International Longevity Centre warned that only 32% of people would be "healthy" when they reached 65.
Malcolm Paul, chairman of JLT Benefits Solutions in Scotland, said that if Scotland gained its own tax powers, the Government should consider tax relief for employers implementing well-being programmes. "It could boost the economy with less sickness days and more productivity through better health," he said.
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