Investing in pensions education and guidance provides benefits for employers and employees
Over the past few years, the pace of change in the pensions industry has posed a number of challenges for employers. Not only has it required organisations to review and adapt their pensions provision, they have often had to do so at a moment’s notice, in some instances while still trying to digest what this means for pension scheme members.
Employers are not the only ones who have had to get to grips with the implications of changes such as the pension freedoms and reductions in the annual and lifetime allowances; in order to make the best savings decisions, it is key employees do the same. The complexities involved, however, do not make this an easy task, so it is hardly surprising that just under half (47%) of respondents to this year’s Employee Benefits/Close Brothers Pensions research say that the biggest impact of the pension freedoms on their organisation has been in more staff wanting and needing guidance around their pension decisions at retirement.
With more choice and flexibility than ever now available to pension scheme members at retirement, making the correct decision for their circumstances is crucial. Just under half (46%) of respondents now offer their staff support at retirement, with 68% of this group doing so because they want to support employees in making informed decisions at retirement.
But when it comes to support for the broader workforce, this does not yet appear to have materialised. This year, just 28% of respondents provide financial education for staff; a percentage that has changed little year on year.
Without sufficient information and guidance, however, there is a risk of employees reaching their target retirement age without the savings they need for their desired standard of living in retirement. If they decide to remain in work for longer as a result, this may mean employers find themselves dealing with an increasingly disengaged and demotivated population blocking the upper echelons of their organisation’s talent pipeline at the expense of fresh new talent coming through.
Investing in education and guidance for employees of all ages, therefore, can be advantageous for employers.
With further change on the horizon in the form of the lifetime individual savings account (Lisa) and the potential, currently unknown, impact of Brexit, such support is likely to become even more vital for pension scheme members.