According to a report from the think tank Social Market Foundation, employers should be legally required by law to disclose their contributions to pensions in job ads. This report claims that the measure would increase retirement incomes, encourage fair competition on the labour market and boost business trust.
The SMF report suggests that the government amends the Pension Schemes Bill, which is currently being debated in Parliament. This would include an obligation for employers to mention the pension contribution rates on all job advertisements.
The proposal aims to increase awareness about pension savings and encourage employers to pay more attention to their contributions at a moment when retirement savings are still not enough. The report shows that 12,5 million adults of working age in the UK do not save enough to meet even a basic retirement income standard.
Around four million people will fall below the minimum retirement standard. This includes having no car access, spending limited amounts on groceries, and taking only one holiday in the UK per year.
The true cost of pension contributions is hidden from employees
Pensions are rarely discussed in politics or as a priority during campaigns, despite the growing concern over inadequate saving. According to the SMF report, this may be partly due to workers not knowing how much their employer or themselves contribute.
Report suggests that employers must disclose their pension contributions to workers in all job advertisements. This will help them see pensions as an integral part of the overall package. It says that this would also increase the pressure on employers to improve their pension contributions.
James Kirkup is the Senior Fellow at SMF and author of this report. He said: “Too many Americans are headed for retirement with insufficient savings, and they don’t know it. This is partly because pensions have become invisible.
Making employers disclose their pension contributions would allow workers to make better decisions, increase pressure on higher contributions and promote fair competition in the labour market.
The report found that more information on pensions can be a useful metric for policymakers and investors who are focused on corporate social responsibility. The SMF highlights the growing debate about ESG (Environmental, Social and Governance), and suggests that pension transparency is a credible and practical way to evaluate how businesses treat their employees.
Ipsos’ and YouGov’s polling data cited in this report show that pay and benefits are still the key factors in public trust of companies. SMF believes that companies who offer pensions above the minimum should be encouraged by their employers to make this information public. This will give them an edge in recruiting and reputation.
Kirkup said, “This proposal doesn’t just benefit workers’ futures; it also benefits the business’s reputation.” The public is supportive of employers who treat their staff well. This includes making decent pension contributions. “All political parties and employers who are responsible should be paying attention to this.”
The report urges policymakers to take immediate action, arguing that the Pension Schemes Act provides an opportunity for this reform to be introduced immediately. SMF calls for businesses to disclose their pension contributions voluntarily, as an example of good workplace practices.
