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09 Mar 2023

How pension data can help in workforce planning

Employee retirement preferences can say a lot about what their intentions are

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When it comes to workforce planning, most people wouldn’t naturally turn to pensions data. It’s easy to assume everything to do with pensions is complex and the ‘pensions’ label can make it only seem relevant when people are old.

But pensions data can be extremely insightful.

There are different types of data available depending on the type of pension scheme or schemes your organisation has – defined contribution (DC), defined benefit (DB), trust based or contract-based (such as a group personal pension).

Retirement age as communications nudge

Most pension schemes have a set ‘normal retirement age’, which can be a useful planning tool as could be the age the employee has in mind to retire. This can be helpful for both workforce planning and triggering communications for workers. You may, for example, want to think about a suite of nudge communications to staff, automatically issued 15, 10, 5 and then each year in the run-up to that retirement age.

For DC schemes in particular, employees may have selected a different retirement age to the standard when making investment choices. Selecting retirement age involves the individual making an active decision so, if you can see this data, it can be helpful to understand the pattern and proportion of staff considering something different to the ‘norm’.

Fund value or benefit size

Data on member fund values (in DC schemes) or amount of pension built up (in DB schemes) can be extremely helpful, especially if you can see this information alongside age ranges. Employees with larger funds or benefit levels are more likely to be in a position to retire completely or look to reduce working hours and vice versa.

Comparing this data against industry research on the minimum income levels individuals or couples might need to live on ‘comfortably’ when they stop work can be powerful. The Pension and Lifetime Savings Association Retirement Living Standards site is a good place to look.

Helping older workers understand the amount of income they’re likely to need when they stop work or work less can be a powerful way to get them thinking about retirement and open that conversation with their employer about the future.

Member choices, enquiries and activity

Similarly, other indicators in pension data can be helpful for both workforce planning and employee engagement. These include the demographics of employees opting out of the pension scheme altogether or choosing to lower the contributions they make. Both are indicators of employees who may be facing tough financial choices and are less likely to leave employment.

Employees increasing contributions or looking to combine pension pots demonstrate commitment and planning. They’re likely to indicate people who are thinking about their future working lives and how they might want this to change in future.

Likewise, data on member enquiries and activity relating to taking benefits using freedom and choice flexibility can be helpful in understanding the decisions employees are taking. This could be generalised data at scheme provider level or more specific data from your pension scheme trustees or in-house pensions team.

The requests members make to the scheme administrator (for example, asking for a transfer value quotation or information on benefit flexibility) and the content being looked at on a pension scheme website, for example, can highlight an engagement opportunity for trustees and/or employers.

Ask your employees

No-one can give you better data about retirement or working pattern preferences or intentions than your employees. Many employers can be nervous of asking questions about retirement. Carried out sensitively and anonymously, this could be the most valuable pension data set.

Royal London research in October 2022  showed:

  • More than two-thirds (68%) of workers trust their employer, making it the third most trusted institution among individuals in the UK, after their own family and bank
  • A quarter (23%) of individuals see their employer as one of their best sources of guidance for long-term financial planning

Employers are in a prime position to engage employees in a way that will, in turn, help them get better, more relevant data to aid workforce planning.

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