Occupational pensions and employee retention. Debate and evidence
| DOI | https://doi.org/10.1108/01425450010332523 |
| Published date | 01 June 2000 |
| Pages | 246-259 |
| Date | 01 June 2000 |
| Author | Stephen Taylor |
| Subject Matter | HR & organizational behaviour |
Employee
Relations
22,3
246
Employee Relations,
Vol. 22 No. 3, 2000, pp. 246-259.
#MCB University Press, 0142-5455
Occupational pensions and
employee retention
Debate and evidence
Stephen Taylor
Manchester Metropolitan University, Manchester, UK
Keywords Pensions, Staff turnover, Policy, Labour market
Abstract This article explores the relationship, in the contemporary UK context, between
employee retention and the provision by employers of occupational pension schemes. Several
sources of literature are drawn on to develop cases for and against the proposition that pensions
play a discernible role in reducing employee turnover. Original research carried out by the author
is then presented which suggests that the retention effect is limited in terms of both its potency
and its extent. A particular finding is the varying importance of pension schemes in terms of the
retention of different staff groups.
A widely held and often expressed view is that employer-sponsored pension
funds are a means used by organisations to help meet key human resource
management objectives. While several such objectives have been identified, the
major focus of attention has been on the role that occupational schemes are
believed to play first in attracting and subsequently retaining staff. Extensive
academic research in the field of pension fund economics has reinforced this
broad view in its analysis of incentive effects in typical schemes and in its
finding of statistically significant correlations between pension scheme
membership and reduced employee turnover. A separate stream of research
analysing employer perceptions of the purposes and effectiveness of pension
schemes has also served to strengthen the belief that they act as an important
management tool for their sponsoring organisations. Although by no means
universally supported, the following set of assertions readily follow from these
research findings:
.occupational pensions play a significant role in the contemporary labour
market;
.occupational schemes exist primarily for labour market reasons;
.the labour market effects (specifically in relation to employee retention)
explain the dominance of the final salary form of pension scheme design
over the past 30 years;
.changes in labour market conditions explain the more recent trend away
from final salary provision to forms of defined contribution or money
purchase scheme.
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