The 3-step ‘financial workout’ to get pensions into shape

Steve Watson, director of policy and research at NatWest Cushon offers some simple steps to give your pension a financial workout.

This month, pensions are in the spotlight, as has become tradition with campaigns like Pay Your Pension Some Attention, as well as the upcoming Pension Awareness Week.

Pension campaigns are an ever more important fixture in the financial calendar and a brilliant way to get the nation not just thinking more about their pensions, but taking action, too. This is essential when we factor in the broader issue of pensions adequacy

The pensions adequacy challenge

Those of you who are familiar with my writing will know I’ve been beating the drum for pensions adequacy for a while now. But let’s recap. Less than 50% of employees save enough to build an ‘adequate’ pension pot, according to the Pensions and Lifetime Savings Association.

An ‘adequate’ pension pot is about having enough retirement income to live a basic standard of living without relying solely on the state pension.

Now, there are all sorts of ways to make our pension pots work harder, but if we’re going to really move the dial, we need to address the biggest issue which is getting more into our pots in the first place. In other words, increasing contributions.

Current auto-enrolment minimum contributions of 8% total (including both employer and employee contributions) fall significantly short of what’s needed for a comfortable retirement.

Industry consensus suggests 12% or more is necessary, yet with employers still dealing with increased National Insurance and National Minimum Wage costs and employees still feeling the squeeze from rising costs of living, legislating for higher contributions is not going to be easy.

That’s why encouraging individual employees to take action right now is so important, and why campaigns like Pay Your Pension Some Attention are a welcome shot in the arm for pension savers across the UK.

A 3-step ‘financial workout’ for stronger pensions

This year’s Pay Your Pension Some Attention campaign centres around a simple but powerful concept: treating pensions like physical fitness.

Just as your employees wouldn’t expect to get fit without a structured workout plan, getting their pensions into shape requires consistent, manageable actions to achieve better outcomes.

And the great part is, they don’t need to be pension experts for this kind of financial workout.

Step 1: Stretch

As in, encouraging employees to “stretch their minds” back to past employers and track down any forgotten pension pots.

The fact is, there are millions of lost or forgotten pensions out there. We’re talking about a combined total of £31 billion, each pot worth £10,000 on average. So, tracking down these lost pots isn’t just housekeeping – it’s treasure hunting that could significantly boost employees’ retirement income. Finding and combining pensions is much easier to do than you might think.

For instance, there’s no need to hunt down old paperwork and policy numbers anymore – and some pension platforms only require a member’s employment history.

Step 2: Check your form

This one’s about encouraging employees to log into their pension accounts and actually seeing what they’ve got.

Our own research shows that more than a quarter (28%) don’t know how much money they have in all their pension pots. This is where pension engagement becomes crucial, and where modern digital tools can make all the difference. Smart pension apps have removed the traditional barriers – endless paperwork, industry jargon, etc. – that kept people at arm’s length from their pensions.

When employees can access their pension information instantly and see their future income projections with a few taps, they’re far more likely to stay engaged and take positive action.

Step 3: Work out

As in, helping employees “work out how much they might need for retirement” and what their current savings could realistically provide.

This is the crux of pensions adequacy. With 4 in 10 pension members under-saving, this reality check often provides the motivation needed to increase contributions or make other changes. Again, modern pension platforms make these calculations simple and visual – employees can adjust their retirement age, play with different contribution levels, and see instantly how it affects their projected retirement income.

It may seem simple, but the beauty of this 3-step approach is that it makes pension engagement feel achievable rather than overwhelming. Most importantly, it’s about encouraging employees to take action now to improve their financial future. While we wait for policymakers to catch up, a generation of employees is at risk of falling further behind on their retirement savings.

The earlier we can get employees feeling confident with money and planning ahead, the more beneficial it will be for them in the long run. They’re ready to take ownership – they just need the right tools, guidance, and a bit of encouragement to get started. It only takes 3 steps to get the ball rolling.

Want to explore this topic further? Join Steve Watson, Director of Policy & Research at NatWest Cushon at the REBA Future of Pensions Summit on 25th September for a spotlight session on the insights from the upcoming REBA Future of Pensions Research.