Why your pension should be at the heart of your financial wellbeing strategy

There was time when there were only pensions and financial wellbeing wasn’t even a twinkle in the eye of benefits professionals and suppliers alike.

Then, in the last decade at least, many employers have recognised the need and opportunity to support employees’ financial wellbeing across the full spectrum of needs, from debt and budgeting to protection, savings, mortgages, estate planning and more.

One of the key drivers for this has been the increased focus on diversity and respecting that each person’s situation is different and supporting just one aspect of their financial needs, forsaking all others, doesn’t help many employees for whom pensions isn’t a priority.

Indeed, recent research from Wagestream among 5,000 UK employees and 600 senior HR professionals highlighted that seven in 10 employees have money worries and that a quarter of UK employees were concerned about money every day.

That said, the one universal financial need of all employees, and one that should be acted upon throughout their careers, is retirement planning. And with people living longer and retirement incomes feeling the pressure of low interest rates, saving adequately for retirement is more important than ever. It’s also something employees aren’t generally that good at.

According to a report from the Pensions Policy Institute sponsored by Centre for Ageing Better five million people approaching retirement are at risk of not having an adequate pension.

If that isn’t enough to put pensions at the heart of financial wellbeing strategy, then consider it through the company’s lens too. It is almost certainly the largest spend you have on employee benefits; one with legal requirements on quality. And it is arguably the first benefit employees want to know the value of, when looking at an offer.

This is why we believe it’s so important to keep pensions at the core of your programme – almost all of your employees will need intervention from the organisation to get to a good outcome and you’re very likely to want to make sure that your investment is well spent and appreciated by employees.

But that is the ‘why’ put it at the heart of your programme. The question then is ‘how’.

The best way to achieve this is to link the ‘why’ with ‘how’ – the narrative that should flow through your employee communications regarding financial wellbeing and pensions should reinforce the key elements:

1. That everyone will have this need and should engage with retirement planning and pensions, irrespective of where they are on their career and financial journey; and

2. That the company recognises its unique role in supporting a great retirement outcome, as demonstrated by the contributions, governance, support and more.

In terms of making that successful, it naturally needs to resonate with employees with very different needs and financial pressures.

If you have a broad financial wellbeing programme, offering products, services and support for a broad range of financial needs, communicating what is relevant to them is key.

For employees in their early career, thinking about university debt and getting onto the property ladder, helping them work out the affordability of simply being a pension member will be key to helping them balance those competing priorities.

For those with a mortgage and children, helping them balance their expenses with what might be the height of their earnings potential might well be the right message to deliver, while for ‘empty nesters’, formalising a retirement plan and understanding what they might need from other savings, estate planning and property may have most impact.

Although we live in complicated times, with greater financial pressures than before, the key to pensions and financial wellbeing strategy is recognising the prominence of pensions within any strategy and how it should be successfully communicated alongside other needs, to ensure employees don’t see it as a competing, but complementary part of their wellbeing.