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Law firms under-invest in pension contributions

But nearly two-thirds say pensions are a key recruitment and retention tool  

10 June 2013

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By Manju Manglani, Editor (@ManjuManglani)

Law firms under-invest in pension contributions compared to the wider market.

That’s according to the Employee Rewards Watch 2013: Legal Sector report, which notes that 58 per cent of law firms (compared to an average of 48 per cent across all sectors) struggle to engage employees with their pensions and drive value from their current spend.

This is despite the fact that around two thirds of respondents consider pensions to be a key recruitment and retention tool.

The findings are based on a survey of 505 HR, reward and finance professionals across a range of sectors in the UK, among which 53 responses were received from the legal sector.

“Looking at the survey as a whole and the legal sector in particular, benefits are still considered as vital to attracting, engaging and retaining key talent, but there is clearly still a lot that can be done to maximise the value that firms get from their package,” suggests Matthew Gregson, managing consultant at Thomsons Online Benefits, which produced the report.

“All sectors talk about the struggle to engage staff, but only 13 per cent of those surveyed actively communicate their benefits at least quarterly and they tend to do so through data media, such as the intranet and printed material. It doesn’t matter how good the package is if it’s not marketed in the best way possible.”

The survey found that the two biggest administration challenges for law firms are communications (40 per cent) and member queries (33 per cent). It notes that firms will need to address these concerns when recruiting talent to get buy-in from staff and fulfil their growth potential.

Seventy-one per cent of respondents said they expect to see increases in headcounts in the coming year. However, only 31 per cent of respondents said they contribute more than six per cent of salary to senior staff pensions (compared to 58.5 per cent of all respondents), while only 28 per cent said they offer the same amount for managers (versus 45 per cent of all respondents).

To increase their attractiveness to top legal talent, law firms are adopting a range of methods such as flexible benefits and salary sacrifice.

Sixty per cent of respondents offer employees the option to buy and sell benefits and 27 per cent process all benefits via salary sacrifice to maximise savings. At 60 per cent, employee engagement with flexible benefits is higher than the market average of 53 per cent.

Salary sacrifice, too, is more prevalent, offered by 92 per cent of respondents. Law firms are less likely to retain the saving in full (22 per cent compared to an average of 37 per cent). Indeed, law firms appear to be more generous than others, either paying the saving back into the benefit (32 per cent), or using it to pay for other benefits (24 per cent).

The vast majority of respondents (92 per cent) said they are confident that they will meet the challenge of new regulatory requirements to automatically enrol workers into a workplace pension scheme. However, 36 per cent admitted to not knowing how they will administrate it.

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