More than half of SMEs are concerned that employees are not fully engaged with their workplace pensions, despite growing efforts by employers to improve outcomes, research from People’s Pension has revealed.

The study found that 52 per cent of SMEs were worried about a lack of employee engagement, while 59 per cent believed workers did not fully understand the value of their pension as part of their overall reward package.

In addition, 62 per cent of employers feared that ongoing financial pressures could lead to higher opt-out rates, reinforcing concerns about disengagement and reduced long-term saving.

However, the findings also suggested that employers were increasingly recognising their role in supporting better retirement outcomes.

More than four in five (82 per cent) SME decision-makers said they believed it was their responsibility to help employees have a financial plan in place for retirement, even amid continued cost pressures.

Communication was identified as a key area for improvement, with over a quarter (26 per cent) of employers calling for more regular education sessions, webinars or workshops from pension providers.

At the same time, almost half (49 per cent) said providers did not currently communicate as effectively as they could, highlighting an opportunity to improve how pensions were explained and understood.

The link between engagement and provider satisfaction was also evident, with 45 per cent of employers stating that better communication or education would make them less likely to switch pension provider.

Commenting on the findings, People’s Partnership distribution director, Stuart Reid, argued that employers’ approach to workplace pensions had evolved significantly over the past decade, particularly following the introduction of auto-enrolment.

He noted that businesses increasingly saw their role as extending beyond simply offering a pension, with a growing focus on helping employees better understand and engage with their savings.

Reid said this shift was reflected in employers' demand for clearer communication, improved tools, and greater support from providers to help staff make informed financial decisions.

However, he cautioned that stronger employee engagement remained critical to achieving meaningful long-term outcomes, describing it as the “final piece of the puzzle”.

He added that, particularly in the current cost-of-living environment, maintaining a focus on long-term saving was essential, with even small actions - such as understanding pension benefits or increasing contributions - capable of making a significant difference over time.

---