Pension education is more important to employees now than ever before. Beyond the introduction of pension freedoms, in itself a dramatic change, employees also have to grapple with:
• The move away from defined benefit pensions toward defined contribution arrangements
• Flexibility over retirement age
• The introduction of auto-enrolment
In this context, it is vital that employees understand how the decisions that they make today will impact their future lifestyle.
Who provides the information?
This raises the question over whose responsibility it is to provide the essential information needed to support personal retirement planning. While the responsibility may ultimately fall to the individual, there are some stakeholders that may feel an indirect responsibility for helping to steer people in the right direction.
In some cases, employers may want to help their employees to get ready for retirement. In fact, a recent study of employers showed that over three quarters (76%) of those surveyed believe that they themselves are responsible for educating the UK population on retirement and pensions. Furthermore, 73% of employers believe that educating staff on pensions is important, and that it is an essential element of the support they provide to employees.
Guidance is needed
However, very few are currently providing this support. Over one quarter (26%) of employers do not provide any kind of information, guidance or advice about pensions to their staff; six in ten do not provide online resources and almost two-thirds (65%) do not introduce their staff to a financial adviser. Over half of employers (56%), only spend a maximum of one day a month on pensions-related administration and support to employees. As companies are under increasing pressure to implement auto-enrolment and to carry out the seemingly endless changes to pension regulation, it is understandable that companies might not have the resource needed to provide educational support.
However, there are a number of ways that companies can introduce this support to their employees without using significant resource. The use of technology can be one of the simplest and most cost effective starting points for improving pension education, and there are online tools emerging to fill the gap that many individuals face in seeking initial guidance.
- Pension Wise is providing support to people who are approaching retirement through their website to complement telephone and face-to-face advice.
- The Pensions Advisory Service offers free and impartial advice to people with workplace and personal pensions.
- AXA Investment Managers and the National Skills Academy for Financial Services have developed an online educational resource called Get Ready. This free, interactive learning too – which can be branded with the company’s logo and contact details – is designed to help employees feel prepared to take the first steps toward a better retirement.
'Get Ready' helps employers to demonstrate their commitment to pension education and highlights the benefit of the employer contributions.
Utilise your technology options
Utilising time-efficient technology solutions has the added benefit of helping employees to make the most of the time that they spend with guidance services like Pension Wise or face-to-face with a financial adviser, as they arrive in the conversation already equipped with basic knowledge. A recent survey found that it takes an average of 30 minutes to explain pensions basics to their clients – time that could be spent discussing personalised retirement plans, making decisions and taking action.
If companies ensure employees in workplace pension schemes have an understanding of their retirement options, it can make for a more enthusiastic and productive workforce that feels confident about their financial future. However, the conversation does not start and end with employers. Opinium’s research also showed that 81% of employers surveyed consider the government responsible for educating individuals in the UK about retirement options and pensions. Companies, the industry and employers need to collaborate closely to ensure they are supporting employees of all ages on their journey with the right advice at the right time, and that they are able to source objective guidance and advice which is free from promotional material.
Employers that want to introduce their workforce to Get Ready can complete the initial interest form on the site. The National Skills Academy for Financial Services will then follow up to create a custom landing page and provide marketing materials to support the promotion of the tool across the business.