A PwC survey of more than 300 employees across the Midlands workforce reinforces that employers are getting a poor return for the considerable amounts they are spending on providing pensions for their employees, and that fresh thinking is needed to improve value for both employers and their workers.

PwC estimates that UK employers spend £30 billion pounds each year on workplace retirement savings (excluding amounts being spent to address pension deficits). Despite this considerable expenditure, the PwC survey of employees across the West Midlands workforce reveals that:

•      84 % of employees either have "no idea" or dramatically under-estimate how much it costs to save for a pension

•      Only 10% of employees take the level of employer pension savings into account in deciding whether to accept a job offer

•      80% say that it would have no impact on their decision to stay with their employer if their employer-provided pension scheme was reduced or closed

•      41% say they don't understand their employer's pension scheme and how it will benefit them

•      22% of employees expect never to be able to retire and a further 28% expect not be able to retire until well past age 65

Jeremy May, pensions expert at PwC in the Midlands, commented:

"Midlands employers need to ask themselves what dividend their organisation is getting in exchange for the considerable sums they are spending on retirement provision. Given that all UK employers currently need to address their employment policies around the impact of April 2011 pension tax changes and October 2012 requirements for pensions auto-enrolment, now is an ideal time to assess whether a shake-up in the way retirement savings are provided can improve value for the employer and its employees."

"The reality of inadequate retirement savings will hit home over the next few years. A dramatically increasing proportion of people wishing to retire are members of defined contribution arrangements who will need to convert in many cases insufficient retirement savings to monthly pension income at historically expensive annuity rates. This will be compounded by these same people facing decimated savings and property values, relative to those people who have retired recently from defined benefit pension schemes. Significant numbers of workers are now expecting never to be able to retire or to have to work well beyond the ages they originally anticipated." 

PwC's research shows that, in lieu of an equivalent wage rise, 21% of workers would prefer their employer to make contributions to a flexible savings scheme on their behalf that allows them to access funds around lifetime events (such as a birth or marriage). A further 31% of workers would prefer employers to offer financial and other assistance with financing property and paying off personal debts.

Jeremy May, added:

"Our survey suggests that employers can be improving their employment deal by offering their workers assistance with managing debts and providing savings into flexible savings accounts. There is also a benefit in helping employees better understand how much needs to be saved to provide a decent retirement income."

"Employees value simple, clear, understandable and accessible assistance with managing their debts and building savings. Employers who offer generous pension arrangements that are not understood or appreciated must question whether this is money well spent.  Current spend on workplace pensions is not making the difference it should."