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The Role of Occupational Pension Schemes in Employer
Reward Strategies: Evidence from the UK

Stephen Taylor

Manchester School of Management, UMIST


The function of occupational schemes from the perspective of employers
and the consequent search for explanations as to why they are provided
have been issues that have interested a number of economists in recent
years (e.g.: Handa 1994, Bodie 1990, Lazear 1985, Ellwood 1985). By
contrast very little attention has been focused on the role of occupational
schemes in the work of HRM and remuneration management specialists.
With the exception of the monograph by Olian, Carroll and Schneier (1985)
and coverage in Sibson's general work on remuneration (1990), few writers
have seriously addressed the issue of what pension schemes may or may
not achieve for providing employers. The failure to include analysis of this
kind continues to occur in spite of the development and propagation in
normative literature of a contingency model of remuneration practice.
As a result writers have tended to advocate the need for all parts of
the remuneration package to align with or underpin organizational
objectives but have omitted from their analyses assessments of how far,
in the case of occupational pensions, this may be achieved in practice.

In this article it is argued that, where they are provided, occupational
pensions are a significant part of the total pay package and that the
reasons employers have for providing such schemes
(or for not providing them) are questions of increasing significance.
It is further argued that while there are a number of reasons for the
comparative lack of literature approaching this subject form an HRM
perspective, the principal explanation lies in the absence of extensive
research into the effects of pension schemes on employee behaviour.
The second part of the article reassesses the issue of the impact of
pension schemes in the light of a number of surveys into employer and
employee perceptions of occupational pensions recently undertaken in
the UK.

ISSN 1367-580x.