Ensuring employees are engaged with pensions should be a key priority, and there are many new tools to help.
There is nothing exactly new about pensions experts stressing the importance of stepping up efforts towards creating employee engagement with pensions. Indeed, was there ever a time when they didn’t.
Pensions, it has for long been highlighted, are considered by the average employee to be highly complex and inherently boring. Because they deal with the distant future, they are also never going to be a priority for those struggling to make ends meet in the here and now.
But, despite provider and intermediary commentators constantly rabbiting on about the need for greater communication and demystification, nothing really ever seemed to change … until the last few years.
The introduction of auto-enrolment has undoubtedly helped as it has elevated pensions from being an issue that is relevant to just some employees to one that affects virtually the entire workforce.
Employers have therefore increasingly realised that, as they are having to meet the increased pension costs, they might as well try and get their best bang for their buck. Making employees aware of and appreciate the employer contributions they are receiving is an important part of this as it can boost morale, and therefore productivity, and help with recruitment and retention.
But there has also been a growing awareness that getting employees interested in their own retirement planning can reduce financial stress – which is a major cause of workplace stress – and help them retire at the time they actually want to, therefore benefiting the employer’s succession planning.
Technological developments have greatly assisted employers in this engagement challenge, enabling employees to be offered information in ever-more attractive and digestible formats and empowering them with a range of innovative methods to help in their investment decision making and their funding calculations.
Virtually all large schemes now have some form of web or digital platform to engage their members. These will normally offer calculation tools to enable people to work out their retirement income needs, potential investment returns and the consequent necessary contribution levels.
Employers are also increasingly providing brief engaging generic videos on a range of pension-related issues, and some organisations are even looking at incorporating voice-activated devices like Alexa into the mix.
Forward-thinking companies are often using expert advisers to provide employees with educational workshops, seminars and even one-to-one face-to-face sessions on pensions issues. Unlike many of our competitors in the employee benefits space, Chase de Vere also has its own independent financial adviser (IFA) arm, so we are unusually well placed to help.
Additionally, employers looking to go that extra mile with engagement are helping employees with the task of tracking down lost pensions, which can play an important part in helping people understand the total income they are likely to be receiving in retirement.
With the average employee having around 11 different jobs during their lifetime and moving home some eight times, it’s hardly surprising that pension details often get lost or forgotten. Indeed, nearly £20 billion of pension assets remain unclaimed, and that figure is still rising.
Nearly two thirds of UK savers already have more than one pension, and changing work patterns mean that this proportion is only likely to increase.
As a starting point, employees should be encouraged to keep all their pension paperwork in one place and to always inform pension scheme administrators about changes of address. But, if they lose track of pensions, there are some straightforward steps they can be encouraged to take.
These include contacting previous employers or – in the case of personal pensions – pension providers. When doing so they should be armed with details such as relevant dates, plan numbers, dates of birth and National Insurance numbers.
Those who can’t find the required details, or who don’t seem to be making progress with their enquiries, can be put in touch with the Pension Tracing Service (Tel: 0800 731 0193), which can provide a free search of over 200,000 workplace and personal pensions.