With pension savers aged 55 and over enjoying greater flexibility and increased choice, it’s important now more than ever for employees to put a retirement plan in place.
From deciding where to invest their pension and when to begin drawing an income, employers need to engage their staff to ensure the right choices are made early on.
It would seem that since the 2011 abolition of the default retirement age (DRA), pensions support and advice in the workplace has been in decline, leading older employees to delay their retirement planning.
An annual survey from The Chartered Institute of Payroll Professional’s (CIPP) released in September 2015, showed that the UK is heading towards a pensions “ticking time bomb”.
The survey found that British workers across all age groups are failing to adequately plan for retirement, with 30 per cent unsure if their pension pot will sustain them in later life. Worryingly, the survey also revealed that of those aged 51-60, 36 per cent admitted to having no pension provision whatsoever.
With life expectancy beyond the average retirement age increasing from 16 years in 1990 to 20 years in 2015, and the average pension pot totalling less than £40,000, it has never been more critical for employees to get help and support.
Here are three ways to engage your employees with their pension and retirement planning.
(1) Listen to your employees
Before you can make a positive impact on your employee’s planning it’s important to first understand what their concerns are. To encourage your employees to open up, create an environment of trust where any issues around pensions and retirement can be discussed honestly.
As the topic of retirement means so many different things to different employees, you should expect to hear all manner of practical concerns as well as emotional reactions.
For some, retirement may mean freedom to indulge hobbies and travel, while for those who lack the confidence and financial awareness, the thought of retirement could be overwhelming. There may also be the fear of living on a reduced income. Depending on how far your employees are from retirement age, there may be a lack of interest and lower engagement.
By ensuring your employees know that they have access to information and guidance should they need it, any weaknesses or gaps will soon become clear.
(2) Demonstrate that you care
A top benefit cited by employees time and time again is a workplace pension where the employer also contributes. By investing in your workplace pension scheme and promoting its advantages, you’ll benefit from increased employee motivation and retention.
Encourage employees to plan for their financial future by educating them that it’s never too late, or too early, to begin planning, while creating clear internal communications that highlight the benefits of your pension scheme.
(3) Provide help and support
To help support your employees, seek guidance from your pension provider who may be able to provide you with access to literature or online tools. Pension Wise, TPAS and Citizens’ Advice also provide fantastic support for those approaching retirement.
With average fees for basic pension advice services rising by around 16 per cent since April 2015, individual advice may no longer be a cost-effective solution. One option to consider is an online advice service that can provide expert affordable advice to all staff.
Online or so-called “robo-advisers” allow employees to access online services either in the workplace or at home. Commonplace in the US and growing rapidly in the UK, companies such as ours offer fully regulated independent advice via online apps.
Designed by experienced chartered financial planners and investment experts, these intuitive apps deliver personalised recommendations, and are supported by telephone help and access to a chartered financial planner if needed.
By providing support and pensions education in the workplace employers can benefit just as much as their staff.
Andrew Firth is CEO at Leamington Spa-based Wealth Wizards.
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