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10 May 2024
by Josh Hayes

How a pension provider can help close the communications gap

Employers have a critical role to play in supporting and encouraging pension saving. Pension providers can help them get the engagement message across

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Pensions are continually evolving, with new regulations and government-led changes, which can be challenging for both employers and employees to keep up with.

The latest government ambition is the introduction of pension ‘pots for life’. If this reform were to happen, employees rather than their employer would be responsible for selecting their pension provider.

This would require a major transformation in the levels of pension engagement, particularly as most of the success in changing employee behaviour has been achieved by taking responsibility away from employees through automatic enrolment and good employer sponsorship of workplace schemes.

The ambition is that, by placing the responsibility on employees, they would be forced to engage more with their pension. There are many concerns and questions that have been raised by the pension industry and how this will work in practice.

Regardless of its implementation though, the government’s goal is clear: encouraging individuals to save more for retirement, a task many are currently falling short of achieving. Last year the Department for Work and Pensions (DWP) said 12.5 million people are under-saving for retirement.

DWP research suggests savers lack motivation to save into a pension due to the complexity of the system and their lack of understanding of it. Younger generations also see retirement as a long way off and many are dealing with the cost of living affecting their ability to save.

Identifying communication gaps

As well as providing and contributing to an employee’s pension, improving employees’ knowledge and understanding of pensions is essential to encouraging employees to take more informed decisions about their financial futures and save more for retirement.

Effective communication is at the heart of this. Getting the right message through to people can inform good pension decision-making, which in the long term translates to them having enough in their retirement pot for a comfortable standard of living.

Howden’s Benefit Design Research 2023 research conducted in partnership with REBA highlighted that benefits communications is the area most in need of improvement, including around pensions.

Other research Howden has undertaken among SME employers and their employees suggested most employees believe they aren’t encouraged to save more into their pension, and almost one-fifth are not confident in their understanding of their pension and retirement options.

Crafting a comprehensive strategy

Pension providers have many resources employers can use, most of which are free and can be invaluable for improving knowledge and education about pensions and boosting engagement.

Most providers will have pension hubs and apps employees can use, not just to check how their pension pot is growing, but to support retirement planning.

Providers often have a range of interactive tools that can be shared with the workforce to help them better understand and plan their retirement goals. These include calculators to show outcomes at different contribution levels and retirement ages.

Other tools can help people make investment choices. With more people considering ESG factors and wanting to know where their pension pot is invested these can help improve engagement and action.

Financial education is an important part of the communication mix and providers often host free webinars and workshops covering a range of topics, from understanding the basics to investment strategies and retirement income planning. These sessions can help employees improve their financial literacy and make better decisions.

Some providers also offer ready-made email campaigns, newsletters and video content aimed at different audiences. It’s important to be aware that one-size-fits-all communication is not effective, especially in organisations with different generations at various stages in their working lives. These need to be used in a tailored way.

Employers should maximise all the resources available to them from the pension provider and adviser and implement an engagement strategy rather than sporadically sending things to employees.

The key is to communicate the right messages to the right people at the right time to ensure they are engaged and continue to engage in saving towards retirement.

To conclude

Pension providers are a valuable resource that can help employees navigate the complexities of pension planning and encourage saving. Finding out what they offer is a good place to start for businesses seeking to improve pension engagement.

The resources and tools should be delivered as part of a well-designed strategy and understanding the unique needs of the workforce is vital for creating an effective communications campaign tailored to their life and career stages.

Overall, part of the success is simply making time and getting into a rhythm or habit of communicating with people and leveraging the provider resources available.

Howden Employee Benefits & Wellbeing can deliver financial education programmes to educate employees on key financial areas, as well as provide pensions guidance and help creating a tailored benefits communications strategy. For more information, click here.

In partnership with Howden Employee Benefits & Wellbeing

Howden provides insurance broking, risk management and claims consulting services, globally. We work with clients of all sizes to provide dedicated employee benefits & wellbeing consultancy.

Contact us today