The good news is that pensions were ranked as the second most important benefit, after salary when people were asked about benefits. Auto enrolment has been a success and brought increased awareness of the benefits of workplace pensions.
People are keen to learn more. We’ve seen an increase in demand for our webinars for employees and one recent webinar had over 700 questions in advance. However, our research also found that one in four people don’t have a pension. There may be a variety of reasons for this, such as being under 22 or under the threshold for auto enrolment, but sometimes it’s just because people think it’s too complex and retirement seems very far away. But the reality is, the sooner someone starts saving, the better it is.
Talking about pensions and encouraging your employees to save into their pension is one way of showing how you value your employees today and in the future. Helping them understand how pensions work, the contributions from you and the top up from the government in tax relief could help you retain employees. This is especially important if you offer more generous contribution rates, matching schemes or salary exchange. The more you talk about the benefits you offer, the more valued your employees will feel.
A worrying 8% of those surveyed thought that pension contributions go into a bank account. This increased to 1 in 4 between the ages of 18 and 25. Helping employees understand that their pension savings are invested, especially younger people entering the world of work for the first time, can set them up with knowledge for life. Encouraging them to check their pension through their providers’ mobile apps or online service will bring the long-term value of their workplace pension to life. Especially if those apps also have financial wellbeing content which can help them build their financial resilience now, as well as help them think about the future.
Four in ten people think that they aren’t saving enough for retirement. So how can you help your employees find out more? Pointing them in the direction of pensions calculators and financial wellbeing content can help. It’s also worth pointing them in the direction of the retirement living standards website. It explains the amount which could be spent on items like food, clothes, holidays and so on so that it’s much easier to picture retirement costs.
We found that 4% of pension savers have reduced the amount that they pay into pensions due to the cost-of-living crisis (55% of pension savers who reduced) and rising mortgage costs (15% of pension savers who reduced). For some, who are struggling to pay bills, this might be the right thing to do. But understanding the impact of stopping or reducing pension contributions is important. We know from our cost-of-living research that people think a reminder from their employer would prompt them to restart or increase their pension contributions. It might be useful to do this just before salary review time or at cyclical re-enrolment.
Recently there’s been a whole week of webinars for pensions awareness week. Ryan Medlock’s recent webinar ‘How is my pension invested? Tips for managing your plan' and Clare Moffat and Sarah Pennells covered “What you didn’t know about your workplace pension and were afraid to ask”. Many of the areas we've have mentioned in this article were also covered on the webinar in more detail so it’s worth encouraging employees to have a listen to the recording which can be found here.