Why workplace pensions have become an important retention tool

Workplace pensions are often incorrectly viewed as a compliance obligation, or a necessary part of employing staff here in the UK.

However, recent research highlighted across the HR industry shows a clear shift: employees increasingly see their workplace pension as a core part of their benefit package, and enhanced pension contributions are becoming one of the most valued benefits employers can offer.

For businesses looking to attract and retain talent, this change in employee perception presents a significant opportunity.

Employees increasingly see pensions as a reason to stay

Recent research featured in HR Magazine highlights just how important pensions have become in the modern workplace. The study found that “nine in ten workers say their workplace pension influences their decision to remain with an employer” (HR Magazine, 2025), underlining the growing link between pension provision and retention.

This is a meaningful shift compared with historical attitudes. Earlier research showed many employers believed pensions had little influence on recruitment or retention — largely due to low engagement and limited understanding among staff (HR Magazine, 2025).

Today, the environment has changed:

• Employees are more financially aware
• State pension uncertainty encourages members to take responsibility for their retirement
• Long-term financial wellbeing is higher on the agenda
• Total reward packages are being scrutinised more closely

As a result, workplace pensions are no longer viewed as a background benefit, they are becoming a key indicator of how much an employer values its people.

Enhanced pension contributions are now highly desirable

A second recent article from HR News, citing research from Epassi UK, reinforces this trend, reporting that “increased pension contributions named 2026’s most desired employee benefit” (HR News, 2025).

This aligns with what we are seeing directly with employers and employees alike:

• Staff want employers that invest in their long-term future
• Pension contributions are often perceived as more meaningful than short-term perks
• Enhanced contributions can differentiate an employer without necessarily increasing payroll costs in the same way as salary rises

Unlike some benefits that appeal to specific demographics, pensions are widely relevant across all stages of a workforce from younger employees beginning their savings journey to those approaching retirement.

The danger of standing still

Many workplace pension schemes were originally introduced during Automatic Enrolment and have not been meaningfully reviewed since.

That can leave employers exposed to several risks:

• Falling behind competitors offering enhanced contributions
• Underestimating how much employees value pension benefits
• Missing opportunities to improve efficiency and cost-effectiveness
• Investing in benefits that employees don’t fully appreciate

The reality is that in today’s employment market, a pension scheme that only meets minimum standards may no longer feel competitive.

Turning pensions into a genuine retention strategy

The good news is that enhancing pension value does not always require major cost increases.

Employers can often strengthen their proposition through:

• Reviewing contribution structures
• Introducing matching or tiered models
• Using salary exchange arrangements to improve tax efficiency
• Improving communication so employees understand the true value of employer contributions

When implemented well, these changes help shift pensions from an unseen payroll deduction to one of the most appreciated parts of a benefits package.

How SG Corporate Services helps employers enhance workplace pensions

At SG Corporate Services, we work exclusively with employers to help them design, review, and enhance workplace pensions and employee benefit strategies that genuinely support their people and business objectives.

Our approach focuses on:

• Creating benefit packages that improve desirability and retention
• Making pensions meaningful through effective communication
• Ensuring strong governance and compliance
• Benchmarking schemes against the wider market
• Improving efficiencies and reducing administrative burden

Because every business and workforce is different, we take a consultative approach helping employers move beyond meeting regulatory requirements towards a workplace pension offering that employees genuinely value.

References

HR Magazine (2025) Nine in 10 workers cite workplace pension as retention factor. Available at: https://www.hrmagazine.co.uk/content/news/nine-in-10-workers-cite-workplace-pension-as-retention-factor (Accessed: 19 February 2026).

HR News (2025) Increased pension contributions named 2026’s most desired employee benefit. Available at: https://hrnews.co.uk/increased-pension-contributions-named-2026s-most-desired-employee-benefit/ (Accessed: 19 February 2026).