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Balancing pay expectations with pension costs

Balancing pay expectations with pension costs

Balancing pay expectations with pension costs

In an era of continually rising prices and below average pay increases, salary levels have become an emotive issue.

A recent article by Debbie Lovewell, deputy editor, Employee Benefits highlighted:

“All employees naturally want to achieve the best standard of living possible and human nature dictates that many will base this on what they can afford to buy and do with their take-home pay.

However, by focusing on their short, or even medium-term future, some employees could be overlooking the bigger picture - the type of retirement they would like to have.”

Additional pension contributions

“What some may fail to recognise is that even though they may not be seeing the increases they would like in their take-home pay, they are still benefiting from additional cash from their employer post-auto-enrolment.

The challenge for employers is how to communicate this to ensure staff recognise and value the pension contributions they are receiving.

This can be tricky when rising prices mean some staff may rather have the cash to spend on everyday items. Come retirement, however, I am sure that even the most hardened pensions cynic will be grateful for everything they have accumulated over their working life.”

Managing long-term cost increases

In the long run, this could also help employers to manage cost increases, particularly as many find themselves paying fees for the first time after the removal of commissions and consultancy charging.

With pay increases likely to remain low for the next few years, employers that ensure staff understand the value of payments, such as pension contributions, may be able to edge ahead in the war for talent.

Petaurum Solutions Comment

An interesting article and one that highlights that both employees and employers should look at the long-term benefits of pensions, in order to sustain a comfortable lifestyle during retirement. With Pensions Auto Enrolment becoming a reality for many SME businesses, now is a great time to start promoting the benefits of saving for the future. With the Petaurum Solutions Auto Enrolment solution, designing and communicating key messages is an integral part of our solution enabling employers to maximise their investment by increasing morale within their workforce and for employees to see the long-term benefits their employer is providing them. If you would like to know more about how we can support your Pensions Auto Enrolment or Employee Benefits schemes, contact us we would love to talk to you.

This information is intended as a general overview and discussion of the subjects dealt with. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal, HR or benefits advice in any specific situation. Petaurum Solutions is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.

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Article by Petaurum Local

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