By Jonathan Watts-Lay, Director, WEALTH at work
Pensions have not been the most engaging or exciting of topics in the past, despite often being the second most valuable benefit an organisation provides to employees after salary.
However, the fact remains that many employees need to save more before it’s too late and employers should, therefore, be working hard to engage them.
Whilst auto-enrolment has come some way in helping employees save for retirement without having to actively engage, it’s generally accepted that current minimum contribution levels are not enough to create a sufficient retirement income.
Indeed, the results of this year’s research show that more than half (54%) of employers do not feel confident that the majority of their workforce is saving enough to be comfortable in retirement.
Rather than leaving this until it becomes more relevant in later life, employees need financial education early on in their careers to they understand the value in starting to save for retirement well in advance, and the huge difference it can make to the amount of income after leaving work
Freedom and choice in pensions, giving individuals the power to decide how to manage their retirement income, has certainly made an impact over recent years.
However, with these freedoms has come much higher risk for employees, and organisations are justifiably concerned.
The 2019 pensions research has identified the top 5 retirement concerns employers have for their staff: uncertainty about how to make the best decisions when accessing their pension benefits (74%), lack of a financial plan (59%), running out of money in retirement (58%), financial security in retirement (54%), and a lack of understanding around the tax implications of accessing a pension (43%).
It’s positive, then, to see that the majority of employers (68%) want to support staff in making informed decisions at-retirement, and that three-fifths (60%) see it as part of their duty of care.
Some employers have, in fact, already taken steps to provide this support, with 43% reporting that they run seminars on relevant topics in the 12 months ahead of retirement, and more than half (53%) offering access to financial advice.
It is also interesting to observe that where financial education has been introduced, more than two-thirds (70%) of it has been delivered by face-to-face seminars.
The bottom line is that pensions and retirement savings do not have to be complicated, as long as the right support is available.
Providing access to financial education, guidance, and regulated financial advice can help employees throughout their career, and especially at-retirement. It can also encourage them to look more holistically at all their finances, not just their pensions, to ensure that informed choices are being made across the board that will help establish a more stable future.
Many workplaces are seeing the benefits of bringing in specialist providers to help support employees; this should lead to a workforce that is better equipped to deal with the many financial issues that they may face throughout their working life, and importantly at the crucial point of accessing their retirement savings, leading to improved outcomes for all.