Why help your employees engage with their workplace pension?

This quarter, you may have heard some buzz around Pension Awareness Day (PAD) and wondered what all the fuss was about. Well, on this day each year the pension industry actively promotes pensions, with events and campaigns that aim to help educate employees and empower individuals to get to grips with their pension.

Here at Integrity365 we are firm advocates for continuing to provide education on the topic of pensions to both businesses and their employees in order to engage employees and aid understanding of what pensions really mean to them.

To comply with automatic enrolment, businesses will be enrolling eligible staff into a scheme and contributing at least 3%of salary on their behalf. However, as an employer or senior employee, why should you also be looking to help employees with their pensions?

The recruitment of new employees and retention of existing staff members, is proving very challenging in many sectors at present. Perhaps this has had an adverse impact on your business, and you would therefore benefit from ensuring employees are aware of the benefits you offer within your organisation and the value they can provide to them.

Regardless of whether you offer a wide range of employee benefits or very few, your workplace pension scheme is most likely to be the most costly, however it does provide an opportunity to make your company a preferential choice for employees. You must ensure that employees are aware of the personal benefits and value of the respective company contribution in monetary terms, as well as any additional extras, such as salary exchange, which makes the scheme more attractive for many members.

To help with the retention of employees and to reward loyalty, I have clients that have introduced enhanced company contributions once an employee achieves long service, such as 5 or 10 years. An extra percentage or two helps boost the employee’s pension, makes them feel appreciated, and could prevent them from leaving the business for a new company.

By encouraging employees to regularly review their personal contributions, you could also potentially create new employer National Insurance Contribution (NIC) saving if you are correctly using salary exchange for your workplace pension scheme. You will also be demonstrating great scheme governance by encouraging your employees to review their provision with the aim of achieving the best possible outcome at retirement. This helps to demonstrate the scheme is working to help employees at retirement and is not simply an autoenrolment tick box exercise.

Many employees are too passive in relation to their pension(s) for various reasons but, in my experience, the main factor is a lack of knowledge. At Integrity365, we run employee pension and/or financial wellbeing clinics which are very well received from both employees and employers. Furthermore, this is a low cost yet powerful method of demonstrating to your employees that you care and want to help them with their retirement provision.

Employees are often looking for guidance or reassurance of where they are with their pensions, an ideal opportunity to assist them in gaining greater confidence, understanding and ultimately a better position in retirement, many of which may not know where to turn for advice without the help of their employer.

In addition to providing an opportunity to ask pension/financial questions, they will also be given the opportunity to truly consider whether the level of contributions being paid into their pension is sufficient for their desired level of retirement. Equally as important, is the opportunity to review whether the investment risk being taken – typically via the workplace
scheme default fund – is suitable for their individual circumstances. It is important that your employees are not too cautiously or aggressively invested to ensure they are
giving their pension the best opportunity to grow.

One of the few positives to come out of the pandemic is that some individuals are now more proactive with their pensions and wider finances. A greater level of engagement and support therefore may be needed to help them truly understand their retirement aspirations in terms of timings and capital required. Most employers genuinely want to look after their employees and recognise the contribution they make to the success of the business. Furthermore, employees are looking beyond pay reviews and want more financial support to help protect themselves and their families, both now and in the future. Experience shows employees truly value the support of their employers in this area, which can only strengthen the
employer/employee relationship, and in turn will assist in the success of your business.

Should you wish to speak to someone about your own pension or that or your employees, please do not hesitate to get in touch with an Integrity365 adviser on 0117 450 1300 who will be able to assist. Our Pension Awareness Day videos are still available via our YouTube channel for viewing, should they prove of interest.