Providing an adequate retirement income for UK employers is not a priority for most businesses, actuaries Towers Watson have revealed.
In a poll of 126 employers, the firm found that most (65%) saw market competition as their main objective to offering a defined contribution pension. Only 15% said their objective for providing a DC pension plan was to ensure their workers save for an adequate retirement income. A small 6% said their objective was to comply with legislation.
But 42% of employers believe their DC plan is currently helping employees to retire. And a quarter think their plan currently ensures their employees have an adequate income in retirement.
Will Aitken, senior DC consultant at the firm, said: 'At the current time, many employers have focused on what goes into DC - market competitive contributions, rather than what comes out - adequate pensions.
'The underlying message seems to be that that, like mortgages, employees need to take ownership of their own finances. Of course, the question is whether employees see it the same way.'
The survey also highlighted some differences in the effectiveness of DC schemes against defined benefit. While 86% of employers felt that DB helped to retain employees and 80% said DB schemes ensured employees had adequate retirement income, for DC, those figures fell to 22% in both cases, said Towers Watson.
DC schemes are proving an inadequate replacement for some of the best aspects of DB, the firm suggested.
Aitken continued: 'Employers need to decide what they want their DC scheme to be, beyond not being DB. Up till now, DC has done a great job of not being DB and can no doubt continue to do so. But given the huge sums of money entering DC schemes, we're seeing a desire to do better than "not DB".'
The firm noted that, despite only a small number of employers saying the objective for their DC pension was to provide an adequate retirement income, almost three-quarters (71%) believe it is the role of the employer to offer services to help their employees as they reach retirement. Around 79% said employers should ensure their DC plan is tailored to meet employees' needs.
Meanwhile, more than half of employers were not worried about being stuck with staff that could not afford to retire.
It found that 58% of employers think their typical employee would still be able at the age of 65. Around a third (38%) said it was more likely that their workers can retire between the ages of 66 and 70, while 3% said their employees would have to work until the age of 75 before they could afford to retire.