The desire to educate employees about their retirement options was one of the key drivers behind BT Group’s decision to launch a pre-retirement programme for its older workers three years ago.
Dennis Gissing, head of diversity practice at BT, says: “We perceived this to be a gap in what we were providing. What was really obvious to us was that a lot of changes had happened around that period, [including] major changes to our pension scheme, and there was a big communications piece around that within the company. It gave people more choice about when they take their pension and when they retire, because those need not be at the same time.”
BT raised the age at which it pays employees their pension from 60 to 65 and introduced a flexible menu of retirement options for staff. These include the ability for employees aged 65 to: retire and take their pension and lump sum; continue working and contribute to build up a bigger pension and lump sum; or take their pension and lump sum and continue working.
BT’s programme, Planning for Retirement, involves nationwide seminars to encourage employees to think about their pension, when they would like to retire from the company and what they expect to be doing then, be it working in another job, in education, travelling the world or looking after grandchildren.
Seminars also cover tax planning and the various benefits BT offers employees to help maximise their retirement fund.
Gissing says: “We also get people to think about basic stuff, like things they will not need to do. For example, they might be cooking lunch instead of spending £8 in a sandwich bar, and they won’t be buying suits to come into the office. On the other hand, they might be heating the house all day because they are going to be at home and their bills will go up.
“Then it is really about helping them understand how their pension works, how the benefits around their pension work and how the various share schemes we have work.”
Independent financial advice
Employees are offered access to an independent financial adviser, which is organised through Wealth at Work, the programme provider. Now in its third year of operation, Planning for Retirement has helped more than 15,000 BT employees with their retirement plans.
The programme began with one course aimed at staff aged 55 and over, but it has now been extended to offer two further courses, one for over-50s and, as of last month, one for employees aged 45 and over, aimed at giving them time to make changes to their investment choices to help maximise their retirement fund. Invitations have been sent to about 29,000 staff eligible for the third course, but Gissing says the take-up of seminars is typically around 40%.
Nevertheless, he says: “We need to put education in place to ensure people are as well informed as they can be, and with choice comes responsibility. We decided it was the right thing to do to develop a programme that gives people a good all-round awareness of things they need to be thinking about, where they actually want to be in X number of years and what they need to do to actually get to that decision.
“It is a complex area and I think employers have a moral obligation, if not a legal one, to ensure people are well informed. We are giving people the tools to make the right decisions for them and for the business. It has to be right for them, and it has to be right for us.”