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.