How to get your employees engaged with their retirement savings
Some thoughts on how to get your employees thinking about their pension.
Research shows that employee engagement with their pensions remains low, as our previous article showed.
However, whilst the pandemic did not help, this low level of pension engagement has been around for quite a while. Citizen’s Advice produced a report entitled Approaching Retirement . In it they discovered that almost one in five UK adults said they were not interested in the value of their pension pot, whilst 15% declared that they simply did not want to think about their pension.
Getting staff to pay into a pension scheme today to provide uncertain benefits in 25, 30 or 40 years’ time can be a thankless task for employers. But it can prove to be worthwhile for both employers and employees. A CBI/Aegon Guide to Pension Engagement entitled Engaging with Saving found that 55% of firms think greater employee engagement with pensions will improve their ability to recruit and retain employees, along with
supporting their succession planning. However, despite this, two in five businesses say their staff are not engaged with their pension.
So, what can be done to encourage all employees – not just the more financially aware – to become engaged with their retirement savings? Here’s a few suggestions.
Since the advent of auto-enrolment nearly all jobs come with a pension, so reaching new employees
is relatively easy. The best way to communicate with them is by giving them a ‘pension pack’ as soon as they start work. This should use simple clear language and be supported by online information and tools. It
also pays to provide induction courses for new joiners as soon as they start and get them to sign up to their pension online so they can access information on their tablets and smartphones.
This leads nicely on to the need to embrace technology. The website of your pension provider may well have online tools that can demonstrate the potential effect of increasing or decreasing pension payments It
could show them that by increasing their contributions by just a small amount would make the difference between a decent lifestyle in retirement and merely ‘getting by’.
In addition, for a fuller appreciation of their complete employee benefits package, check out Kellands Corporate Wellbeing, our enhanced digital employee benefits platform designed to help you attract, retain and engage the best employees.
Hosting financial education seminars is another good way to get people thinking about their future. This should go beyond just helping employees to get to grips with their pensions and should look at their
finances in general, placing the pension within the bigger financial picture. Kellands Corporate can help with this process, if required.
When they start to understand the bigger picture, many employees will hopefully take a more active role in financial planning for their future. It means getting them to understand that auto-enrolment by itself may not meet all their needs, and encouraging them to think about what they actually need to give them the lifestyle they want in retirement.
Apart from these set pieces, it also makes sense to communicate with employees on a regular basis. This entails recognising that different groups have different needs – for example new joiners, younger
employees, the 30–50-year-olds, the over 50s and those nearing retirement all have particular requirements.
For example, with younger workers, the focus should be on saving in general – the word ‘retirement’ could well be a turn-off. So aim to get them into the savings habit. You also need to get them to recognise that
their pension is just a part of their pay packet and that you pay into their pension pot as well as themselves.
For the 30–50-year-olds, you need to acknowledge that they could well have more immediate concerns such as mortgages to pay and a family to support. Whilst retirement may not be a priority for them, this is the
time when they should be thinking about how much they can save for later life. So don’t talk about their workplace pension scheme alone in your communications.
Those closer to retirement will be more aware of the need to plan for it. You can support them by encouraging them to think about the decisions they need to make from age 55. You could possibly consider offering a financial health check for those turning 50. Again, we can help here.
Finally, regularly reminding employees of the key basic facts can be a good way to get them to engage more fully with their pension. Remind them that:
You put money into their pension pot – it’s not all down to them. If they opt out, they won’t benefit from your extra contributions.
Tax relief amounts to a 25% top-up for most savers (66% for higher rate tax payers).
You can get this across by explaining that for every £80 they put in, the taxman adds another £20 -making 25% extra instantly. For higher tax payers, if they put in £60, a £40 bonus comes from tax relief.
It’s their money – they can decide when it goes in, and when it comes out. What’s more, currently from age 55, they can take 25% of it in cash, tax-free.
UK businesses contribute billions of pounds to employees’ pension pots each year. Most employers acknowledge the positive effect that their significant investment in pensions can have, not only in the
futures of their employees, but on their ability to recruit and retain a motivated, productive workforce.
Yet, year after year the level of engagement with pensions remains much lower than businesses would like. As outlined above, some simple communications steps may help to improve the situation – along with the
use of employee benefits technology to reach out and sell in the benefits you provide.
If you would like to improve the level of pension employee engagement within your company or would like to consider a wider all-embracing digital technology solution, contact Kellands Corporate today. We would
be more than happy to help.