Good job, good pension? The influence of the workplace on saving for retirement

Most private-sector employees in the United Kingdom (UK) are automatically enrolled into individualised defined contribution (DC) pension accounts. In a DC environment, income adequacy in retirement is highly dependent on the decisions that individuals make earlier in their lives. The ease with which they move into employment, and the pension support that they then receive from their employer, can be critical in determining outcomes. This paper discusses how employees respond to workplace pension schemes and the circumstances under which they assess the suitability of their contributions. The findings are based on an embedded case study comprising qualitative interviews with 25 employees of a large UK utility company. Participants were selected on the basis of socio-economic similarity. The research concluded that fixed-term employment negatively impacted on saving for retirement, both with respect to scheme membership and to the level of saving. Furthermore, it was found that the employment context had an influence upon retirement savings behaviour. The proactive approach of the employer in providing retirement benefits, and the trust that employees had in their employer, positively influenced membership and contribution levels. In addition to employer endorsement effects, both the encouragement of older work colleagues and workplace norms had a role to play in influencing how successfully individuals prepared for retirement.