6 ways to keep employees engaged with their pension

There’s a lot to think about when planning for retirement. How much to save? Are you saving enough? Which investments to choose? All of these unanswered questions can feel a little overwhelming. With 44% of employees  not knowing how much they need to save to live the lifestyle they want in retirement, it’s important to provide support to help them plan for the retirement they want.

So, what can you do to encourage your employees to think about their retirement savings? Here are 6 tips to help you get started:

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. 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. Also signpost to where new employees can go for further support.

2. Embrace the technology

Pension providers’ websites often include online tools to show the potential effect of changing your contributions. Sharing these tools can help them to reach a new level of understanding.

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. 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. The holiday season may not be the best time to launch an engagement campaign, but there are plenty of key dates throughout the year when people will be thinking about their budgets and long term plans. 

5. The right message for the right life stage

Our Age of Ambiguity research (PDF 6.11 MB) shows that 54%  of the population feel anxious when dealing with their finances, but there are significant generational differences. Gen Z (69%) and Millennials (73%) are most likely to feel anxious when dealing with finances, which is considerably higher than their Gen X (49%) and Baby Boomer (36%) counterparts.

Pension communications need to 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.

6. 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 (57 from 6 April 2028 unless they have a protected pension age), 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 understandable that employees may prioritise more immediate financial concerns. 

A pension fund is the basis for most people’s retirement and the standard of living they enjoy after work. By providing support to help your employees take charge of their retirement plans, it can help them to plan for the future they want.