21 May 2020

How to make your pensions offering fit with your broader financial wellbeing strategy

It’s never been more important to support employee financial wellness. The coronavirus situation, and its economic impact, may be grabbing all the attention at the moment. But even before the pandemic, many employees struggled with debt, money worries, bad credit and a lack of knowledge about effective financial planning.

Employers want to help free their employees from financial stress and worries. They understand the toll financial worry can have on physical and mental health – and how this manifests in the workplace. It might be poor sleep, trouble focusing at work, increased absenteeism, or greater friction between staff and management. However it exhibits – it’s bad news for the employer as well the employee. As a result, many employers have introduced ongoing support, annual events and wellbeing weeks to raise awareness and provide information for staff in these areas.

But with the focus on day-to-day issues, a crucial part of employees’ long-term financial wellbeing often gets overlooked: their workplace pension.

By integrating your pension offering with your broader financial wellbeing strategy, you can help employees learn and understand how to build a solid financial foundation throughout their lives – rather than mere crisis management for part of it.

Research, research, research

Before making any changes, you’ve got to know where you stand currently. Start with focus groups, surveys, or steering groups. This puts your employees in the driver’s seat, and shows you exactly what they want from their financial wellbeing package – and what you can do to improve your offering.

Use the sessions to probe employee knowledge. How do they think about pensions when it comes to their finances (if at all)? What priority do they give it against other shorter and medium term goals?

One of the main discoveries of ‘deep dives’ into financial wellbeing packages is often that employees are not as engaged in their pension as their employer would like them to be.

An absence of pension engagement from employees can usually be attributed to lack of clarity and unclear communication about long-term benefits. So how can you improve your communication and, in turn, make your workplace pension a main feature of your financial wellbeing benefits package?

How better communications drive better engagement

An employer is in a unique position to help with pension planning. A good pension scheme may be a deciding factor in why an employee has chosen your company to work for, and can play a large part in employee retention. Choosing appropriate moments to discuss your pension offering with your employees can help to emphasise the importance of a pension. For example, it could be part of your strategy to educate them on increasing pension contributions if they’re starting a family, buying a home or even getting married. These are big life milestones, and an employee is often looking ahead and considering the financial implications of such large decisions.

Sometimes, they might be more concerned with more immediate financial worries, and you might find out that pensions are low on their list of priorities. In cases like this, it can be useful to highlight that your (employer) contribution increases as their personal contribution gets larger (dependent, of course, on your pension contribution strategy). Talk them through how this could help them later in life, and stress that this is an opportunity to take advantage of a key benefit of their employment package.

Finally, some employees might not have any room in their personal finances to increase their pension contributions above the minimum. At this point, emphasise the financial wellbeing resources that you have in place for your business. It might be that your employee is suffering from financial stress, so ensure there is communication regarding your Employee Assistance Programme or other resources.

Are there other resources that can help?

There are other valuable resources that you can use to help bring pensions centre stage of your financial wellbeing strategy. Chat to your pension provider or benefit consultant. What work have they done with similar employers? Do they offer any additional help such as onsite/online financial education sessions? Do they have any other services that might further engage your employees? It’s now popular for pension providers to offer ISAs and saving accounts through their pension platform, which can provide additional opportunities to engage employees with their longer term financial planning.

In addition, government, third party and charitable websites can also be useful in providing information, support and guidance to your employees, such as the UK government’s Money and Pensions Service.

So what’s the answer?

In short, pensions should be at the heart of any employee financial wellbeing strategy. Employee apathy or ignorance concerning pensions can be tackled with careful research, clear communications and effective delivery.

But only when employers make it clear that pensions matter.

This article is provided by Hargreaves Lansdown.