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Pensions are a terrific employee benefit provided by employers – but not all staff have fully grasped their worth or necessarily made the link as to why they personally need to save.
Helping staff understand the value of saving for their future is the end goal. So how can we help them take those all-important first steps? I don’t know about you, but I’ve always considered myself a bit of a luddite when it comes to technology. But something miraculous happened during lockdown. Everyone at home was internet shopping, doing online exercise classes and binge watching The Crown on Netflix. Even Dad was suddenly elevated to tech whizz. Truth be known, I panic every time something needs fixing, but necessity has brought me kicking and screaming into the 21st century.
I suspect many people returning after furlough will be in the same boat. People who, with a bit of encouragement, could now find accessing their pension online an easy and simple way to manage their retirement savings and become engaged with their very valuable pension pot.
At The People’s Pension we have 5 million members and know that once they’ve set up their Online Account, they’re much more likely to remain engaged and interact with their pension savings.
They’ll know where to go to find the latest fund information, they’ll see their combined contributions building month on month and can make choices about how to invest.
Once a member starts to interact online they can carry out straightforward tasks – check their beneficiaries, their address details and, importantly, how much is in their pot.
This becomes a simple and easily repeatable task, which means that members can start to engage with bigger issues around levels of savings, government tax benefits and how to plan for retirement. It’s our job to make those next steps simple, easy to understand and relatable to their everyday situation.
Most pension providers offer online member access, so if employers are interested in helping staff understand the value of their pension, helping them access this information digitally could be a great first step to support their staff getting engaged and taking personal responsibility for this future income stream.
By way of example, The Banks Group have embraced staff engagement. Using our communications toolkit, they’ve grown online registration to an impressive 63 per cent.
They arranged on-site drop-in meetings to show employees how to log on and explained what they can do with their Online Account. And they’ve gone on to show employees how to check that the amounts shown as pension contributions on their payslips appear in their pension pots, see the value of their funds and how to nominate beneficiaries.
According to The Banks Group’s payroll manager, employees now feel in control. Many hadn’t known how to transfer other smaller pension pots they owned into The People’s Pension online and keep track of all their savings in one place.
As coronavirus restrictions ease and more people return to work, it’s a good time to encourage staff to go online and get familiar with their savings. Some might’ve missed that we introduced a rebate on the management charge – a benefit that’s already helped 1.3 million of our members save a little bit more. Similar changes may have taken place in other schemes – so finding positive messages that highlight value for money now, when many have been dealing with reduced incomes in the last year, must come as welcome news and will help to reinforce why it is important to save.
The impact charges have on pension savings is very real – so for a member of The People’s Pension with £15,000 in their account, the effect of lowering our fees over the course of a typical year, means we will add £17 extra to their pot, with this increasing the more they save for their retirement. This kind of sum might not sound much to start with but compound the rebates across the accumulation years and they could add a significant amount to an individual’s retirement savings – more than £14,000 for an average earner.
Advisers have a clear role to play here too, working closely with their employer clients in support of their employees. They can help them to understand their savings, how to optimise their pension pots by knowing about charges, and how to recognise the value of a well-run default fund.
It’s time to use technology to connect people with their savings. Let’s all help them see the value in their pension, take responsibility for their savings, benefit from any available charge reductions offered by their scheme as savings grow and feel confident in knowing how much to save.
Find out more about our communications toolkit here: www.thepeoplespension.co.uk/ communications-toolkit/CA1 or contact us on 0333 230 1309.
