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17 May 2023
by Anasuya Iyer

5 ways employers can flip the script on retirement planning

Engaging your employees around pensions requires an holistic plan

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The data is clear: pensions are failing to engage employees. Employers are struggling to find ways to encourage employees to make full use of their workplace pensions – even when generous matching programmes are offered.

But employers’ attempts to get employees to think about far-off retirement might not only be boring (and therefore failing to motivate) but also dangerously wrong when it comes to financial planning.

That’s because they’re focused only on pensions. Ask any good financial planner: you can’t do retirement planning without a holistic money plan.

Here are 5 ways employers need to flip the script on retirement planning to get employees excited, motivated and engaged.

1. Don’t separate long and short-term thinking

You can’t decide how much to increase your pension by unless you know everything that’s going on in someone’s life now and all the way up to retirement. By focusing on the long-term picture alone, we’re not helping employees understand how the pieces of their financial life fit together. Or how to balance their goals and priorities.

Employers need to work harder to help employees reframe the relevance of pensions by helping them see their salary as being for both now and their future selves.

2. Keep all money topics connected

Treating long-term savings differently encourages employees to see money topics as separate and disconnected. The truth is that they’re all connected – retirement planning is life planning.

Planning in a more integrated way helps employees see how their different pots of money can all work in harmony, like pieces of a jigsaw puzzle coming together to help achieve their goals.

Building awareness of all the financial levers an employee has also makes it easier to adapt to changing circumstances. Feeling a sense of control and ability to flex in response to new scenarios or phases of life helps to reduce money stress.

3. Help employees see a future that excites them

Behavioural psychologists have discovered that having a vivid mental image of what you’re planning for increases motivation and engagement. But most pension programmes are overly generic or abstract. To motivate employees to take action, employers need to help them imagine the future life they want.

As an employer, you can help your employees figure out the vision of their future that will most motivate them to take action today.

4. Seek to remove bias

Much financial knowledge is passed on through family and friends, so there’s a high likelihood we’ll pick up unintentional biases or myths about who can, or should, benefit from money advice.

A sense of exclusion from the world of money can perpetuate taboos around talking about money (including pensions) and mean employees may miss opportunities to improve their financial health and resilience. Transparency needs to be the norm, not the exception.

5. Work to bust pensions myths

People often shy away from things that are hard or complicated. And pensions rank highly on the ‘too complex’ or ‘too boring’ spectrum. In fact, only one in five people are confident they know where their pensions even are.

Employers need to acknowledge this and step up the way they educate teams on what’s available. A generalised pension webinar once a quarter isn’t enough.

Some of the top myths about pensions often heard are:

  • ‘It’s too late to start saving’
  • ‘If I’m auto-enrolled, I don’t need to do anything else’
  • ‘I’m too young to worry about it’
  • ‘I don’t have any control over it (so why should I pay attention)’
  • ‘I’d be better off investing elsewhere – investments get better returns’

Make sure your financial education programmes are tackling these myths head on.

Pension advice and education needs to be done differently if employees are going to engage.

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