Pensions become part of the talent equation

Pensions become part of the talent equation As employees pay closer attention to the full value of their benefits, a good pension is becoming an increasingly important part of the employment proposition In a competitive market for talent, salary will always matter. But employees are increasingly looking beyond the number that lands in their bank account each month and considering the wider package an employer can offer.

For David Churchill, chief people officer at Version 1, pensions form an important part of that equation. Version 1 is a technology services business employing about 4,000 people, with a significant presence in Ireland as well as global delivery capabilities and customers. In a people-based business like this, Churchill says the employment proposition has to recognise both employees’ immediate needs and their longer-term future.

“Everything we do, our success depends on people, so their expertise, their judgment, the relationships they have with customers,” he says.

Version 1’s employee proposition encompasses meaningful work, career development, fair reward and financial wellbeing. Within that broader concept of total reward, Churchill sees pensions as fundamental. “It’s a tangible investment in someone’s life beyond the work they’re currently doing.”

 The challenge for employers is ensuring employees recognise that value. Historically, Churchill says, pensions have sometimes been regarded simply as another deduction from a payslip rather than an important part of compensation. Employers therefore need to make their pension provision visible and understandable, including explaining the contribution they themselves are making.

“Salary is really important. Clearly, it’s the prominent part of anyone’s compensation. But it’s only one part of the total value proposition.” 

In a competitive employment landscape, simply having a pension scheme is no longer necessarily enough to distinguish one employer from another. Good pension provision is increasingly expected. “It’s no longer, in my view, a differentiator, it’s a requirement,” Churchill says.

What can distinguish an employer is the quality of the pension provision and the employee experience around it. Different employees will naturally engage with pensions in different ways. Someone approaching retirement may have very different questions from a person in their first job, while some employees want straightforward information and others want to explore their investment options in considerably greater detail, says Churchill. Employers need to accommodate that range.

“It’s not just enough to say a scheme exists,” Churchill says. “Transparency is central. Employees should be able to understand an important element of their reward without having to chase information, while practical questions should be easy to answer: what am I contributing, what choices do I have and who can I contact when I need help?” 

 Churchill has a 17-year-old son preparing to enter the workforce and remembers his own attitude towards pensions when starting his career. For someone dealing with rent, transport costs or hoping eventually to buy a home, retirement can feel very distant.

“The starting point for this is empathy,” he says. “Rather than ignoring those immediate pressures, employers should acknowledge them while finding ways to make the future more tangible.

“That means clearly showing what the employee is saving, what the employer is adding and what those contributions could potentially mean over the longer term.” 

 The objective, Churchill stresses, is not to turn every employee into an investment expert.

 “Our aim here is not to turn our employees into investment experts. But it’s to help them understand the benefit and know where to get support at just the right time.” 

 Communication also needs to continue beyond an employee’s first few days with a company. Onboarding already involves absorbing large amounts of information. Simply explaining the pension scheme once and expecting an employee to navigate it alone thereafter risks undermining the investment the employer has made in the benefit.

Instead, employees need ongoing access to information, digital tools and appropriately qualified human support.

Investment performance is another important part of the equation. Employees are becoming more interested in where their pension money is invested, Churchill says, including environmental, social and governance considerations. 

Employers and pension providers therefore have to balance a number of considerations, including performance, fees, risk, choice and usability, says Churchill. “Long-term performance matters, but so does communicating potential outcomes responsibly without making promises about future returns.” 

 That combination of transparency and choice allows employees to make informed decisions without requiring them to become investment specialists.

The impact of pensions on retention, however, should not be overstated. “Version 1 does not separately measure the effect of its pension scheme on whether employees remain with the company,” Churchill says, “and therefore cannot attach a specific retention figure to it.” 

 Instead, he sees pensions as one element of a much broader relationship between employer and employee. People consider whether they are treated fairly, whether they have opportunities to progress, whether leaders deliver on their promises and whether the organisation invests in their wellbeing. “The pension is one tangible element of that picture,” he says.

One mistake employers can make is assuming that investing in a pension scheme automatically means employees appreciate its value.

A company can spend significant amounts on pension provision while leaving employees unclear about what they are receiving. That makes communication almost as important as provision itself.

Employers should clearly show their contribution, explain important choices in plain language and make information and support easy to find, Churchill says.

The importance of doing so may grow as pension coverage expands. With Ireland’s MyFutureFund auto-enrolment system broadening pension participation, workplace pensions are becoming an increasingly familiar part of the employment relationship.

That could make employees more likely to compare what different employers offer, not simply in monetary terms but in the quality, accessibility and flexibility of their schemes.

Churchill believes pensions are therefore likely to become a bigger consideration as people assess employment choices. As pension coverage becomes more commonplace, the opportunity for employers lies in demonstrating what makes their own provision valuable. Ultimately, that comes back to ensuring employees understand what they have.

“It goes back to understanding the quality of the provision,” Churchill says. “And that isn’t just about the monetary value. It is about access and information, and decision-making rights of the individual.”

 For more than 40 years, Zurich has been supporting customers with retirement solutions and is now one of the largest pension providers in Ireland. The Zurich Master Trust draws on our long-standing experience, our expertise and innovation, and our strong focus on scheme governance to deliver a streamlined pension arrangement – helping to give you and your employees greater peace of mind. Contact your Scheme Advisor or Financial Broker to learn more about Corporate Pensions from Zurich. You can also contact Zurich directly here or call us on 01 209 2299.

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