Workplace pension schemes are an essential part of the UK’s retirement savings landscape, but employee engagement with these schemes continues to fall short.
While automatic enrolment has significantly increased the number of workers contributing to pensions, there remains a gap when it comes to overall participation and the understanding of the benefits of saving for retirement. Consequently, there are many members on target to receive post-employment incomes that are far below what they will need to live the retirement lifestyle they desire.
Increasing employee engagement with workplace pension schemes is crucial to ensure employees are adequately prepared for retirement, and employers can play a significant role in this process. Here are five key strategies employers can adopt to boost engagement with their workplace pension scheme:
Simplify Communication and Provide Clear Education
For many employees, a lack of understanding about how pensions work is the biggest barrier to engagement. With money saved into a pension untouchable until age 55 (to be age 57 from 2028), and with it invested in a fund (or funds) with glamourous titles that make no sense to the saver, it is no surprise that many are left cold by their pension despite these savings being one the largest asset values held by most employees.
Employers can help to counter this by offering clear, jargon-free communication and educational resources, whether produced and arranged by themselves or through a specialised benefit consultancy. Providing workshops, webinars, or one-on-one sessions where time is taken to demonstrate and explain things in clear English can help employees understand the importance of pensions and how to make the most of them.
Leverage Digital Tools and Technology
In many aspects of life, IT and AI play an ever-increasing role, and retirement saving is not excluded from this. Most people nowadays have access to a Smart Phone or Tablet and engage more and more with their financial lives online.
Many Workplace Pension Schemes provide the ability for employees to access easy-to-use apps or online dashboards, giving real-time valuation updates, investment options, and retirement forecasts available 24/7 – helping employees feel more in control of their financial future.
When this is further supported by a benefit engagement platform in the workplace, employees have user-friendly access to pension information to engage with when and how it suits them.
Incentivise Increased Contributions
While there are minimum pension contribution levels set down in legislation, in terms of the contribution that employers pay on behalf of their employees and the total contribution that is being paid, these levels should very much be a guide for employers rather than the default position.
Where financially possible, employers should consider whether they might have some form of tiered contribution structure. One idea might be increased employer contribution levels on behalf of their employees based on seniority in the business, thus rewarding career progression. Alternatively, provide matched increases in contributions over and above the ‘entry level’.
Such a strategy will not only boost engagement but also motivate employees to save more for their retirement and commit to the business for their future.
Promote The Flexibility of the Workplace Pension Scheme
Every Workplace Pension Scheme has to provide a Default Investment Fund into which contributions are paid. However, many schemes will have a range of additional investment funds available to savers. For some, one or more of these funds may be more appropriate for them and their retirement aspirations than the Default option.
Many employees are unaware of this flexibility. Neither are they aware that they can set their own expected retirement date, so that all projections they see are appropriate to their plans. Additionally, they are often unaware of the ability to nominate who they want their retirement savings to be paid to if they were to pass away before the funds are claimed by them.
Promoting these areas of flexibility and ownership within the scheme will mean that employees are more likely to engage with their savings and address their individual needs and wishes.
Promote Regular Reviews and Ongoing Support
Engagement shouldn’t be a one-off event; it’s about maintaining involvement.
Employers could encourage employees to review their retirement savings at regular intervals, whether that’s annually or at key life milestones. Using the services of professional, independent Pension or Benefit Consultants can help ensure this is done using clear, precise and accurate language.
Such organisations should be able to assist with the provision of regular reminders, offering ongoing support through group and / or individual meetings. In addition, provide written material to help build, and then maintain, knowledge and engagement so that employees are better able to identify, and then manage their long-term retirement goals.
Conclusion
By simplifying communication, embracing technology, offering incentives, providing flexibility, and promoting regular reviews, employers can significantly boost engagement with workplace pension schemes. These strategies not only help employees secure a better financial future but also foster loyalty and trust within the workforce, leading to a more financially confident team.
If you would like to find out more about how MWM Employee Benefits can assist in this area, please send an email to advice@mwmeb.co.uk.
Disclaimer
The information provided is for general information only and is not intended to address the particular requirements of an individual or business. It does not constitute any form of advice or recommendation by MWM Employee Benefits or Menzies Wealth Management Ltd and should not be relied upon by individuals in either making or refraining from making any financial decisions. Where necessary, you should seek appropriate professional advice before acting on any of the information provided.
MWM Employee Benefits is an appointed representative of Menzies Wealth Management who is regulated and authorised by the Financial Conduct Authority (FRN 486548).
Menzies Wealth Management Limited is registered in England and Wales under number 06597008. Our registered office is at 1st Floor, Midas House, Goldsworth Road, Woking, Surrey GU21 6LQ.
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