How to help employees with their retirement planning

I’ve been thinking about this subject for a while now and one of the things that crosses my mind is that I wonder how many people really have a ‘strategy’ around retirement planning.

I’ve no doubt that many, or even most people think about what life will be like for them as they get older and enter retirement – but that’s a far cry from having a strategy and even more from executing it.

There is a simple definition of the word strategy at oxforddictionaries.com which I rather like - a strategy, it says is: “A plan of action designed to achieve a long-term or overall aim.” Applying this definition to a retirement planning strategy, for me there are three key parts that employers need to consider when helping their employees prepare; planning, action and long-term aim.

1) Planning

One of the main challenges of getting employees engaged with retirement planning is that for many people even thinking about that subject is a major turn-off. Let’s be honest, when your employees are in their 20s there will be many other things for them to expend their energy on – establishing their careers and getting on any rung of the property ladder, for example. Then when they are in their 30s and 40s it will all be about family life, kids, schools, and seemingly endless demands for money from, well just about everywhere.

By the time they’re through that phase, they may then be into caring for elderly relatives and perhaps post-studies children who have returned ‘home’ as they take the first steps on that same journey for themselves. And, for some of them, other life events will take over as they continue that journey – maybe tackling debt or dealing with divorce and all that comes with that.

So, in light of all these distractions, what can employers do help their employees get engaged with planning ahead for retirement?

Pensions, of course, play a vital role in the retirement planning process, but with the introduction of auto-enrolment, many employees have adopted a laissez-faire attitude and assume their future financial interests are now taken care of. There are, however, a number of other things employees need to think about and have in place if they are to have a truly robust retirement plan.

So, what else can we be doing to help employees plan for retirement beyond the pension itself?

2) Action

For me, the biggest danger in thinking about retirement is just that – thinking about it and not proactively doing anything along the way to make the transition from work to retirement smoother. Many people simply don’t take action now that could avert bigger issues later in life for them or for their loved ones.

Employers can play an important role in ensuring employees are made aware of where the risks lie and proactively help them to take action to mitigate them.

Helping them to get their affairs in order well in advance by making a will and getting life policies written in trust, for example; helping them to have the perhaps difficult but really important discussion with aging parents about putting a lasting power of attorney in place – are all vital steps in ensuring an employee’s future interests are protected.

Also, helping employees take steps to reduce and tackle debt to ensure that when they reach retirement employees aren’t shackled at a time when they may already be having to adjust to significant changes in your own income.

Really, all I am suggesting is that instead of focusing just on the pension, employees should be encouraged to think about and deal with all the things that they could tick off now that will save them heartache later.

3) Long-term aims

And, on that topic of ‘later’, we do, by definition need to think about our employees’ long-term aims when planning for retirement. And yes, again the pension is absolutely crucial to that of course.

But maybe along the way, employees need to think about what they want to have dealt with before they hit retirement age. So, here are a few things employers can advise employees to focus on:

Do as much as they can to clear their debts before retirement
In addition to their pension, save what they can as they go
Get their affairs in order – make a will, put policies into trust
If possible, deal with any other family matters – powers of attorney, care for elderly relatives, divorce – before retirement
Tackle any outstanding ‘low-level’ legal issues – County Court Judgements, neighbour disputes, housing issues – as they happen.

In other words, don’t wait until the long-term is ‘now’ to address these. The sooner employees attend to these things the less they’ll have to deal with in retirement.

And, hopefully, they’ll have access to a range of tools and support from their employer to help with this as part of a well-rounded retirement planning strategy - better still if that gives them access to advice either online, by phone or in person.

So, in answer to the original point – yes retirement planning should be about more than just pensions, central though they are. And these days there is a wealth of information, advice and self-service tools available to make sure that given the right time and focus these other important areas can be dealt with efficiently leaving employees with more time to enjoy their post-work years.

Atuhor is Andrew Walker, Commercial Director at Epoq.

This article was provided by Epoq.