How to make sure all employees engage with pensions and can save effectively for retirement

Pension platforms have become far more user friendly of late, but they are still rather clunky. The support available for employees, in particular, could use a drastic overhaul.

The first step on our employees’ journey to effective retirement savings is ensuring they are familiar with how to use their pension scheme. This might sound rather straightforward, but experience tells me this is no mean feat. Once your staff have finally found their way through the tech, only then will they start to recognise and comprehend the wider benefits of their pension scheme; something you can emphasise further with effective governance and education.

Introduce employees to their pension scheme

“Bob’s the pension guy. He’ll have a chat with you and help you get used to your scheme.”

Good old Bob. I remember my first pension provider session well: Bob explained what an ‘Expression of Wish’ form was and showed me how to log in. Unfortunately, I’ve not seen Bob for years and had forgotten everything he told me almost immediately after our meeting. ‘Bob’ is also a luxury for many providers who have quickly exchanged him for ‘Derek’ or ‘Janet’ on the end of a phone line. After we’ve pressed a series of numbers and been on hold for 20 minutes, Janet finally tells us which button to click so we can view how our pension is invested.

The most common question our highly qualified financial planners are asked is not “how do I retire comfortably?” but rather “can you show me how to log in?”. Whilst we can, of course, provide pointers, we’d really value the ability to direct them towards a clear, (advert free) step-by-step video guide that their pension provider has created. Preferably, a whole video library demonstrating how to use all elements of their pension platform in bite-size chunks. Unfortunately, most of the time, we have to send them back to their HR team, who then get Derek on the line.

What can you do as an employer to help improve this situation? First and foremost, canvassing your provider for high quality, video tutorials is a must. If you manage to facilitate such gold dust, do ensure it’s hosted in a highly accessible location, either on the home page of your employee benefits platform or as a hyperlink on your employees’ desktop. If it isn’t well advertised, an employee’s natural reaction will still be to reach for the phone. Failing this, some providers may be able to provide access to a dummy account. You can then record your own walk through using any number of video platforms that allow you to screen share and record. Others will be able to distribute a PDF slide deck that isn’t too far off a comprehensive user guide. As a last resort, you may have to revert to the method of screen shots in a word document. I found myself wincing just writing that. It really is a woeful state of affairs.

Ensure pension members get value from the scheme

Once your employees are confident at interacting with their pension platform, it’s your duty to challenge and highlight the value it provides to them. It’s important to remember that, ultimately, the members are paying for the scheme, yet many feel completely disengaged with it.

The Pension’s Regulator has set out six key principles to help guide employers looking to ensure they carry out their duty of care to members:

Essential characteristics: schemes are designed to be durable, fair and deliver good outcomes for members.
Establishing governance: comprehensive governance framework, with clear responsibilities and accountabilities.
People: those accountable for scheme activity and decisions must know their duties and be ‘fit and proper’.
Ongoing governance: schemes benefit from effective governance and monitoring through their full lifecycle.
Administration: schemes are well-administered, with timely, accurate and comprehensive processes and records.
Member Communications: communications designed and delivered to ensure members can make informed decisions.

It’s rare to find an employer that has a strong handle on all of these. They are all important, but effective governance and member communication can bring a pension, and consequently retirement planning, to life.

A governance report can help you to identify staff members who may have a savings shortfall so you can step-in to offer support. In addition, it should provide a clear picture of the number of members nearing retirement, enabling you to ensure a clear exit strategy is in place. Importantly as well, it will highlight whether the default investment fund is meeting requirements. It is then something tangible you can pass on to members. Your employees will not only appreciate your willingness to challenge the provider on their behalf but also your desire to keep them well informed. It won’t go unnoticed.

Education is paramount

If you’ve come across my commentary in the past, you won’t be surprised to read that, in my view, a well-structured financial education programme for employees is paramount. It still amazes me how little financial support is provided in the workplace, particularly given the levels of absences caused by poor mental health and financial concerns – it costs UK employers £1.6 billion a year. It’s a major issue that could be mitigated significantly by providing engaging financial workshops and one-to-one financial guidance in the workplace. Your employees will be more efficient and it will reduce company costs – it’s a no-brainer.

If you aren’t providing this for your employees during such a financially and mentally challenging period, please make it your 2021 mission to change this.

In summary, it’s quite easy to forget the basics. If you’d like to help your staff on the road to a comfortable retirement, do ensure they actually have the ability to navigate their scheme. Once that’s in the bag, regularly demonstrating the value it provides is key. Highlighting, and reacting to, any problem areas via a comprehensive governance structure is a sure-fire way to bolster your endeavours. Finally, though, if there’s one thing and one thing only – educate. Educate your staff to the nth degree and repeat – it could genuinely have a life changing impact.

The author is Jordan Gillies, head of well-being at Lorica Workplace.

This article is provided by Lorica Workplace.