Corporate platforms will help employers and employees get to grips with a new era in pensions and workplace savings, says Padraig Floyd
The government has pinned its hopes on the workplace becoming the hub for the population’s future saving plans. People trust their employer far more than they do government or financial institutions and the government is hoping to use this fact to its advantage.
Employers know it, too – it is part of the reason they spend so much money on benefits to attract and retain employees at their organisations.
To be fair, they have realised for some time a growing need to provide more flexibility in their benefit structures. Some have done this to better reflect that we have moved on from the social model of the post-war era. We don’t expect – or perhaps want – to work for a single employer all our lives, have 2.4 children and retire at 65 with a gold watch. We are living longer and have greater expectations about how we should live our lives. Although you’d be hard pushed to find a ‘take it or leave it’ final salary scheme these days, it wasn’t always an attractive option for some workers.
So even if we didn’t have auto-enrolment being imposed from this year, employers were already in the market for a more flexible – and attractive – structure to encourage their employees to save for the future.
As technology has developed, the processes used to manage information have become less specialised, so many of us can effectively administer our own personal data.
Technology has transformed the way in which many of us do business, but also run our personal finance and even our social lives. This is where corporate platforms come in.
These new systems offer (at least in theory) seamless delivery of a number of financial savings instruments to employees, allowing them to control their workplace savings from single central hub, much as they would any other online account.
The core benefit remains a pension, but auto-enrolment means every employer has to have a scheme in place for their eligible employees.
But the real benefit is, in many cases, that they offer a ‘holy trinity’ of financial perks – the pension, individual savings account (Isa) and share scheme. Not only are these all tax-efficient, but pension and Isa can both enhance employee share ownership by offering a safe haven for shares on the maturity of a scheme.
Employers often complain that they cannot get their employees to understand the true value of the benefits they offer them.
That should become simpler within a corporate platform structure, where the power of the long-term, tax-efficient saving in the form of a pension can be allied to the short-term, flexible tax-efficient saving of an Isa. Aside from demonstrating the potential of using a suite of products, the single point of entry makes it easier for employers to communicate with staff and take them to educational materials, because it is all there in one place online.
I see this as an exciting journey. Auto-enrolment brings its own problems, not least the cost to employers, but the advent of corporate platforms enables employers to package their benefits better and have more integrated communication strategies.
The fact that all the transactions are online means the data can be interrogated like never before and so achievement of objectives can be determined more easily and, dare I say it, return on investment can be assessed more clinically.
Someone has to pay for the ageing population, and although we don’t want to hear it, that has to be us, because we are the ageing population.
Whether we like it or not, we are all going to have to save more for our futures. It is time to embrace change, but access to properly integrated benefit structures will allow us all to make better use of the benefits our employers already offer us and in a tax-efficient way.
Padraig Floyd is contributing editor of Workplace Savings Quarterly
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