The economy and the world of work are changing at breakneck speed. Over the last 18 months, Covid-19 has forced employers to adapt their operations and seek innovative routes to market just to survive. Flexible working has accelerated overnight. And pension investments have fluctuated in response to the uncertainty of the pandemic.

The CBI/Mercer 2021 Pensions Survey ‘Commitment through crisis’ showcases business’ resilience throughout this period. It highlights that the vast majority of firms – 92 per cent of those with defined contribution schemes, and almost all of those with defined benefit schemes – did not reduce their pension contributions despite the difficulties caused by the pandemic. That’s because firms overwhelmingly continue to see a strong business and moral case for offering competitive workplace pensions.

As businesses recover from Covid-19 they are looking ahead to the long term. That includes considering the role they can play in helping employees save for retirement. Employers know they must take greater responsibility for communicating with staff about their pensions, for example at induction or key career stages, and providing advice as part of workplace schemes.

Equally, they feel strongly that government should prioritise educating more people about why understanding and paying into their pension can improve financial security at later life. Many financial services companies already have schemes aimed at increasing young people’s financial literacy.

Our survey also reveals how pension schemes are gearing up to tackle decarbonisation. With the devastating impact of rising emissions evident, net zero is a cause that businesses stand firmly behind. And they know the clock is ticking. That’s why they support the new requirement to disclose where pension schemes may be exposed to climate-related financial risk, which larger schemes are drafting now.

Employers also view the obligation to submit these reports as a unique opportunity to strengthen relationships with their stakeholders. The CBI/Mercer 2021 Pensions Survey found that nearly half of businesses (47 per cent) with a defined contribution scheme believe that climate-related disclosures will provide a platform to better engage employees with their future savings. A further 57 per cent of businesses with a defined benefit scheme believe that making disclosures will lead to greater communication and collaboration between trustees and employers.

While employers are committed to meaningfully incorporating environmental, social and governance (ESG) considerations into how they are run, unfortunately understanding of the new disclosure requirements remains low among both employers and trustees.

Currently, pension schemes’ ability to compare and contrast the green credentials of their investments is limited. This is primarily due to lack of readily available data across the investment chain. So, the government should continue working with industry to create common standards ensuring that the climate impact of investments can be properly measured.

While challenges lie ahead for business, pension schemes and the wider economy, the resounding message of the survey is a positive one. Partnership between industry and government can ensure that schemes help to build up people’s financial security, while supporting the UK’s bold green ambitions.

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