Workers in the maritime industry could face significant hardship in retirement due to lack of understanding of pensions, revealed today by new research from Ensign.
A survey of employees in the shipping and maritime sector reveals that workers are aware of the importance of pensions, ranking pensions as more important than job satisfaction, workplace environment or flexible working arrangements, when choosing their employer. And more than four out of five respondents see the provision of a workplace pension as “very important”.
However, the research also shows an alarming lack of awareness and understanding. Only 42% know how much they are paying into their pension; only one in three know what they need for a decent retirement, and over half (54%) have no idea, or have forgotten, how much they are paying in fees and charges.
Equally worrying is that 41% of employees surveyed were unaware of the tax relief on their pension contributions, and are therefore potentially undervaluing the benefits to be gained by saving through a pension.
Commenting on the findings, Ensign Chairman, Rory Murphy, said: “This research reveals a potential scandal in the making. Workers are clearly aware that saving for retirement is a critical issue, but lack the tools to make informed decisions about how best to achieve this.
“Far too many employees are unaware of the tax advantages of pension saving, or don’t know how much they need to save, or even how much they are saving. This is a toxic cocktail which could lead to poverty in retirement for thousands of workers, and as such is a critical issue for our industry. Doing nothing is not an option.”
Other key findings include: Four out of five respondents (79%) are members of an employer’s pension scheme; Respondents are more likely to put any spare cash into a bank or building society, and least likely to use it to top up their pension; Less than a third think they are paying enough (29%) or too much (3%) into their pension; Half of respondents don’t know how much they need to save into their pension to achieve a decent retirement income, and one in ten hadn’t even thought about it; Only 15% review their pension performance more than once a year, while more than a third never, or hardly ever, do so; Only 22% are aware of the impact of costs and charges on their pension; 41% are not aware of the tax relief they can get through their pension.
However, employers in the maritime industry could be missing out in the battle to attract top talent by underestimating the importance of pensions as part of their employee benefits package, according to the research.
It points to a significant disconnect between the importance attached to retirement saving by maritime industry employers and their staff. Just half of employers surveyed see pensions as a “not very” or only “moderately” important part of their overall employee benefits package.
Employers view the recruitment and retention of staff as their single biggest HR challenge, ahead of political and regulatory developments and globalisation. Yet pensions rank only sixth among factors seen as affecting recruitment and retention, behind such factors as flexible working and workplace surroundings.
Commenting on the findings, Ensign CEO, Andrew Waring (pictured), said: “This research represents a wake-up call for employers in the shipping and maritime sector. It illustrates an alarming disparity between the industry’s employers and their workers in their attitudes to retirement provision, with employers worryingly slow to recognise the importance of pensions to their staff.
“In a highly competitive labour market, employers are all too aware of the challenge of attracting top talent to the industry, and employees are telling us that pensions are a critical factor in their choice of employer. Yet many employers are under estimating the importance of retirement provision as part of the employee benefits package. The message from these findings is clear: employers who downplay the importance of pensions risk losing out in the battle for talent.”
Other key findings include: Employers see recruitment and retention of staff as their biggest HR challenge, followed by GDPR and globalisation; Employers see salary as the biggest factor in recruiting and retaining staff, followed by job satisfaction and annual leave – pensions rank sixth; While 40% of employers review the performance of their pension provider annually, a third do so only every two years or (in 13% of cases) not at all; 50% of respondents think auto-enrolment (AE) has succeeded in encouraging more UK maritime employees into pension saving, while a further 30% think it has encouraged more employees into pension saving, regardless of whether they are UK domiciled; Half of respondents are clear on auto-enrolment requirements and which employees are eligible, while a further 20% were unclear but had enrolled all staff anyway, either to treat staff equally or to avoid the risk of non-compliance; To comply with AE requirements, 40% of respondents used their existing scheme as the qualifying vehicle, while 23% joined a qualifying scheme such as a master trust, and 17% set up a new qualifying scheme of their own; Employers regard investment returns as the most important factor in choosing a pension provider, followed by provider reputation and overall cost.