7 ways to keep employees engaged with retirement savings

Getting your employees to think about their retirement savings can be tricky, but we have seven suggestions to help you get their attention.

It’s in everyone’s interest for employees to stay tuned in to their workplace pension schemes. Engaged scheme members are motivated to perform well, less likely to suffer financial stress and more likely to be able to afford to retire at the time that’s right for them. But for a large number of employees, the subject of workplace pensions is either shrouded in mystery or clouded by worry.

In our latest survey, research shows that over half (58%) 1 of non-retired people aged 45-60 are worried they will not have enough money to provide an adequate standard of living in retirement. Yet over a fifth (21%) 1 of non-retired people in this age group are not taking action to strengthen their retirement income.

So, what can we do to encourage all employees – not just the more financially aware – to become engaged with their retirement savings?

Helping your employees prepare for their future with healthy retirement savings is key. The consequences of ignoring their pension could lead to poverty in retirement for some or an ageing workforce as people can’t afford to retire.

Laura Stewart-Smith, Workplace Savings Manager.

1. Capture hearts and minds from the start

It’s worth taking a look at your induction processes to make sure they cover workplace pensions in depth at the earliest possible stage. As well as dealing with this subject verbally, try to include details in an information pack for new employees to take away – and make sure the language is as straightforward as possible without unfamiliar pensions jargon. You also need to signpost where new members can go for support and further explanation of the facts.

2. Embrace the technology

Pension providers’ websites often include online tools to show the potential effect of increasing or decreasing payments. Directing scheme members to these tools can help them to reach a new level of understanding. Adding a comparatively small amount to their contributions could make the difference between a good lifestyle in retirement and merely ‘getting by’.

3. Use financial education to get employees thinking

Hosting financial education seminars is a good way to get people thinking about their future. This is about far more than helping employees to get the basics right when it comes to understanding their schemes. You could recruit pension providers and other professionals to help employees to look at their finances in general, rather than concentrating solely on pensions.

When they’ve seen the ‘big picture’, many employees will feel inspired to take a more active role in planning their long-term futures. We need to combat the temptation to think auto-enrolment means automatic financial security. Instead, employees should be thinking about the amount they’d need to give them the lifestyle they really want in retirement.

4. Tell them the facts, then tell them again

To keep employees switched onto the benefits their workplace scheme offers, they need to be reminded of the facts on a regular basis. Employers might well need to tell employees what they are going to tell them, then actually tell them, and then tell them again for good measure. And it’s worth considering using different media to let them know about it.

5. Timing is everything

It’s not just a matter of what you tell your employees, or even how often you tell them. It’s also about when you tell them. Even the most committed of providers couldn’t pretend that pensions are the most interesting subject matter your employees will read – and some people will naturally be more focused on short-term financial demands. Even in the post-coronavirus environment, the holiday season may not be the best time to launch an engagement campaign – and for many, December has a lot more to do with Christmas present than retirement yet to come.

6. The right communication for the right life stage

Our research shows those aged 35-44 (25%) 1 are least likely to be taking action to improve their retirement finances. This compares with 14% of consumers aged 18-24 1, the lowest percentage of any age category. The findings come despite widespread concern that many people will struggle to fund their needs in later life.

We need to make sure that pensions communications acknowledge the different needs and priorities of employees of all ages.

  • With younger workers, concentrate your communications on saving in general – the word ‘retirement’ is likely to be a turn-off. The pension scheme should be positioned as a part of the whole package you offer – and don’t forget to emphasis the fact that you pay into their pot as well as themselves.
  • When you’re talking to employees aged 30 to 50, acknowledge the fact that they’re likely to be dealing with more immediate concerns such as the expense of raising a family. Pension support should be part of your service to help them make the most of their money.
  • Employees who are 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.

7. Keep it simple

Finally, telling employees a few straight facts is the best way to get them to engage more fully with their pension. Remind them that:

  • You put money into their pots – it’s not all down to them. If they opt out, they won’t benefit from this.
  • It’s their money – when it goes in, and when it comes out. Currently, from age 55, they can take a quarter of it in cash, tax-free.
  • 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 of take home pay contributed to a pension, a basic taxpayer has £100 invested. That’s 25% extra – instantly. For higher tax payers the final cost is £60, a £40 bonus comes from tax relief.

Help your employees see the bigger financial picture

With so many daily demands on our purses and wallets, it’s easy to understand why your employees may be reluctant to think about a retirement that could be a long way off. But we all know how quickly time goes by, so it’s worth putting in a little time and effort now to get your employees to think about their future.

A pension fund is the basis for most people’s retirement and the standard of living they enjoy after work. If you can take steps to help make that future brighter for your employees, you can be sure they will thank you for it when the time comes. Why not start by using some – or all! – of these suggestions to get your people thinking about what kind of a future they’d like to have.

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