Why it’s important to get your pensions communications right
Companies need to communicate more effectively with their staff about their workplace pension scheme.
When it comes to your workplace pension, there are two types of communication for you to consider – mandatory and optional.
As an employer, as well as setting up the pension scheme for staff, you also have to maintain the scheme. And for employees to understand how their pension works, you should look to communicate the benefits to them as well.
Beyond the mandatory communications that you need to make, communicating the value of your workplace pension is also crucial to engage with members and to encourage them to make the most of their pension. This can also help towards overall employee wellbeing and financial resilience.
And this need has never been greater.
Why it’s important to communicate effectively
The need to effectively communicate pensions to employees is now more important than ever. Pensions Age recently reported that all generations expect to fall short of a comfortable retirement, whilst a second survey by Standard Life shows that nearly half of UK adults don’t know how much they have saved in their pension pot. A further survey by Royal London shows that most pension savers face a retirement income shortfall.
Much of this is down to lack of financial knowledge and understanding of pensions amongst employees. Most workers don’t have a good understanding of their pension, which highlights the need for better communications, to ensure that
- employees are aware of the benefit and options available
- employees understand their financial situation
- you meet your legal and regulatory requirements.
Mandatory communications to staff
Employers are required by law to automatically enrol eligible employees in a suitable workplace pension. As part of this process, there are mandatory communications that must be carried out. Before you set up a workplace pension or enrol a new employee in an existing scheme, you need to communicate specific information.
The Pensions Regulator (TPR) outlines the necessary details, which include – the auto-enrolment date; the type of scheme and who runs it; employer and employee contributions; whether tax relief is given on employee contributions; how auto-enrolment works; investment risk; the opt-out process etc.
TPR also tells you how to impart this statutory information to workers, which has to be in writing. Acceptable methods include:
- Sending hard copy information via post or internal mail
- Handing over hard copy documents in person
- Sending information in the body of an email
- Sending information via PDF or other attachments via email.
Optional Workplace Pension Communications
While some forms of pension communication are mandatory, others are optional. As an employer you don’t have to provide them, but as well as helping towards overall employee wellbeing, engagement and financial resilience, it can make sense for you too.
Research conducted by the Centre for Economic and Business Research (CEBR) found that financial concerns contribute to higher business costs resulting from employee absenteeism and presenteeism. The CEBR also discovered that maintaining a negative money mindset can significantly affect businesses of all sizes. Therefore, improving your employees’ financial resilience is a worthwhile investment.
So, the more information you can provide your staff to help them get to grips with their pensions the better, leading to more contented workers.
Start with the pension basics
Pensions are complex, so it’s a good idea to look to simplify how pensions work within your communications. Not every employee has the time or inclination to read pages of information, which might not be of interest until later in life. Regular emails, posters about your scheme and desktop screen savers can help.
Email is obviously a very effective way to communicate to all employees. You can keep talking about pensions via regular emails, covering updates, statements, and savings. Pension providers often have email templates, which makes this process easier and will ensure that the message you are communicating is right.
Pensions are jargon-heavy, so talking to employees in a language that makes sense to them is key. A pensions glossary could be useful to help staff become more comfortable with the jargon.
By communicating the benefits of your pension scheme in simple, easy to understand language, you can help members build up their pension confidence. Having clear information about their pension, allows members to make informed decisions and gives them the confidence to save for the long-term – knowing that you, their employer, are also making contributions to their future.
Investment Education Material
Investment education materials can also be a valuable resource for employees looking to understand their investment options under their workplace pension.
These materials can include brochures, seminars, or other resources that explain the various investment options available and help employees make informed decisions about how to allocate their retirement savings.
In addition, webinars and videos can break a complicated topic down into bitesize and easy-to-digest chunks and can be personalised. Podcasts too, where pensions are discussed in conversational language, can be engaging.
Retirement Planning Tools
Retirement planning tools, such as calculators, worksheets, or other resources, can help employees estimate their retirement income needs and determine how much they should be saving for retirement.
These tools can be an effective way to educate employees about their retirement prospects and encourage them to take an active role in planning for their future.
Pension providers can help here. Most of them have retirement and savings tools which allow members to see what their pension will look like at retirement. These include pension calculators, key pension facts and support guides, such as ones for assessing your financial wellbeing and resilience.
A pensions website or portal where members log in to access information are also helpful.
Provider support
As well as their retirement and savings tools, providers can help in other ways too. Inevitably, they will sometimes make changes to their products, so you will need to communicate these to employees when they happen.
However, they also often produce a lot of news stories and features which can help employees better understand the world of pensions. This can be a valuable additional resource for you to help your workers become more informed when it comes to making decisions about their pension. It means you can share some good and useful content with your employees without having to create it yourself.
Get in touch
The above outlines the importance of getting your pension communications right, for both your employees and your business.
If you would like to discuss your workplace pension and the pensions communications process more fully, please do not hesitate to get in touch.