Employers are failing to effectively communicate the value of pension schemes to employees making pensions’ problems worse.

Research from the Chartered Institute of Personnel and Development (CIPD) shows that one in five over-50s interviewed had little or no understanding of how their pension schemes worked. This rose to one in three respondents in the under-25 age group.

Case studies have been used to illustrate how businesses can communicate their pensions schemes effectively in a new guide by the CIPD and the Employer Task Force on Pensions (ETF) that deals with the issue.

Charles Cotton CIPD Reward Adviser said that companies with excellent pension arrangements are ‘hiding their lights under a bushel’ by failing to communicate the benefits with staff.

“There is no single great pension scheme or one way to communicate. Employers should think about the bigger total reward picture and select a pension scheme that meets the needs of the business.

“They also need to think about the procedure and the way that they communicate the pension scheme to their staff, making sure they invest enough time and money to select a communication medium suitable for their staff such as email, posters and presentations, and ensure employees are able to understand this information. This can help turn pension costs into a huge investment for the business.”

The guide is available at www.cipd.co.uk