How can your employees control their retirement saving?
Dale Critchley, Policy Manager, Workplace Benefits at Aviva, takes an in depth look at the Savers vs Spenders report.
An in-depth look at the Savers vs Spenders report
Retirement is often associated with the state pension age. It’s currently 65 but is rising gradually over the coming years.
But the age people should be focussed on is actually a decade earlier. Now the vast majority of workplace pensions are defined contribution (DC), 55 is the age big decisions can be made.
At 55, a DC pension pot can be accessed, and the owner of the pot has a number of options. These range from leaving it alone and continuing to pay into it, right through to withdrawing the whole lot.
For this reason, I was pretty surprised by the results of Aviva’s new ‘Savers vs Spenders’ report. The headline finding was that 40% of 46–55 year-olds don’t know how much they have saved in their pension — that was the highest proportion in all the demographics that were surveyed.
These people are approaching retirement with a blindfold on and have one of the biggest financial decisions of their lives on the horizon.
Thankfully, in this digital age, there is plenty employers and pension providers can do to help rectify this situation.
- Many companies use an intranet for their internal communications. Clearly signposting employees to details of the workplace pension scheme is a good starting point. Workplace pension providers are also set up to help make employees pension pots easily accessible.
- A modern workplace pension is likely to have a web presence or even an app.
- Providers can also run campaigns for employees, encouraging them to engage with their pension. Some even offer financial education sessions that can help employees understand retirement planning.
However, gathering details of older pensions from jobs in the past may be slightly more tricky. If delving into a drawer full of dusty paper work doesn’t bear fruit, the government’s pension tracing service is there to help. This can even work if you can’t remember whether you had a pension or not.
The ‘Savers vs Spenders’ report also revealed that almost half of employed people in the UK believe they need to be saving more. While that is not the most positive of statistics, the sliver-lining is that at least they recognise they need to do something. But clearly that action must be taken.
Auto-enrolment is helping to bring pensions out of the shadows and into every day conversation. But the first step everyone can take to get control of their retirement saving is to understand how much they have.