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Workplace pensions are the biggest private source of retirement income for many UK adults. According to the latest government figures, in 2023/24, occupational pensions made up 32% of total gross income for pensioner couples and 26% for single pensioners.
And yet, recent research findings published by Employee Benefits reveal that 39% of employees do not feel confident that they’re making the right decisions about their workplace pensions, and 38% have yet to take meaningful action, such as setting a retirement age.
Keep reading to find out why this confidence gap matters – for your employees and your business – and find out what you can do to help.
Why it’s important that your employees feel confident managing their workplace pensions
If your employees are eligible for the full new State Pension when they reach their State Pension Age, they’ll receive just £12,547.60 each year (2026/27). In contrast, Pensions UK estimates that a “moderate” retirement costs, on average, £32,700 for a single person and £45,400 for a couple.
As such, many people rely on their workplace pensions and other sources of income to provide the lifestyle they want in later life.
However, employees who lack confidence in making pension decisions may be less engaged with their workplace schemes and delay taking action, which could increase the risk of undersaving.
This could lead to considerable uncertainty and concern about the future, which may affect the individual’s wellbeing and their performance at work.
Indeed, an employee’s financial stress could result in:
- Poor morale
- Lower productivity
- Absenteeism and presenteeism
Moreover, employee benefits are an increasingly important factor in recruitment and retention. According to Pluxee, 1 in 10 employees would accept less pay in exchange for better benefits.
That’s why it’s crucial to ensure that the occupational pension you offer is competitive and easy to engage with. It’s not enough to have a scheme in place; your employees must understand how to make the most of their pension to fully appreciate this benefit.
Read more: Business owner? How boosting employee satisfaction could save your company money
3 ways you can help your team engage with their pensions
There could be many reasons why your employees feel unsure about how to make the most of their workplace pensions.
Perhaps your scheme seems too complicated or full of technical jargon. Maybe, employees facing competing financial pressures and demands on their time prioritise other tasks over learning about and managing their pensions.
Here are three ways you could encourage greater engagement with your workplace pension:
1. Consider offering matched contributions
Auto-enrolment means that UK employers must place eligible employees into a workplace pension.
The government has set the minimum total contribution at 8% of qualifying earnings, with employers paying at least 3% and employees making up the rest.
Both parties can choose to pay more than these minimum amounts to bolster their retirement savings. However, disengaged individuals who feel underconfident about pension decisions may be less likely to review and adjust their contribution level in line with their circumstances and goals. This could result in a financial shortfall in retirement.
In 2025, the government’s Pension Commission warned that “employees are not saving enough”. Figures show that 30% of private sector defined contribution scheme members are saving at auto-enrolment minimum levels. Where employees make additional contributions, these are low; a median earner, on average, contributes just 1.7% of their pay on top of the auto-enrolment minimum.
Employer matching could be a powerful way to incentivise your employees to engage with their pensions and save more. The way it works is that when your employee increases their contributions, you agree to match some or all of the extra amount.
This not only benefits the individual’s retirement fund, but it also raises the perceived value of your pension scheme, enhancing recruitment and retention.
2. Ensure the scheme is easy to understand and access
Employers have the right and responsibility to choose a workplace pension scheme for auto-enrolment.
If it’s been a while since you set yours up, now might be a good time to review it and gather employee feedback to ensure your scheme is simple, transparent, and user-friendly.
The survey by Employee Benefits found that 42% of employees would be more engaged with their pension if they had a better understanding of it.
It might be worth researching alternative schemes as a comparison. Look for:
- Platforms with easy-to-use member dashboards
- Well-explained default options
- Jargon-free communication
You could ask a small group of staff to try out a new system to test how accessible it is.
3. Provide pension education workshops
While training sessions are an extra business cost, they could help to boost employee engagement, productivity, and loyalty.
An independent, regulated financial planner can offer practical sessions on the topics that matter most to your team, such as:
- Choosing an appropriate contribution level
- Deciding on the level of investment risk to take on
- Weighing up the pros and cons of pension consolidation
- Understanding how to access their pension in retirement.
Investing in such educational workshops sends a clear message to your employees about the importance of engaging with their pensions. It also lets them know that your business values its people.
Get in touch
If you’re a business owner who needs help reviewing and adjusting your workplace pension scheme, we can help.
Email hello@sovereign-ifa.co.uk or call us on 01454 416653.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pensions Regulator.
Approved by Best Practice IFA Group Ltd on: 16/7/26