Pensions have a long history as an important financial benefit for employees, helping to safeguard financial security in the long term. The Covid-19 (Coronavirus) pandemic has prompted many organisations and individuals to focus on some serious, short-term challenges.
For some, pensions have not been a priority. For others, and increasingly more so as organisations consider how to ‘build back better’ employee benefits, pensions are the subject of renewed focus. We are also hearing more from our clients about how the experience of the past 12 months is affecting their people’s thinking about long-term futures.
At Travers Smith we have certainly been thinking about our own employee pension plan and how that might fit with views about risk and financial security post-pandemic.
Clearly Covid-19-related financial pressures may be significant for some time for many employees and their employers. For those with particular financial pressures at the moment, ensuring people know they can temporarily take a break from or reduce contributions instead of stopping them permanently can make a big difference in safeguarding this important source of income for retirement.
More generally, we know that the earlier employees start to save, the easier it is to amass a pension pot for retirement. We are finding that many leading employers are becoming increasingly focused on talking to employees about the benefits of joining a pension plan from the very start of their careers, ensuring there is some understanding of what it takes to build up a pot and the potential tax advantages of doing so.
Tailored communications which feel relevant further into careers are equally important, particularly for those who may not have been able to maximise saving opportunities in the past, particularly because of career breaks like parental leave. Providing access to information can take many forms: from online materials to printed newsletters, poster campaigns, apps, podcasts and modelling tools and one-to-ones. Providing information does not need to be expensive and can often be managed in-house, although the input from specialist third parties and the pension provider is often helpful. Pensions have too often felt complicated and employees can sometimes feel embarrassed asking what they perceive to be basic questions. Pensions communications need to be made as simple and plain-speaking as possible.
Many employers have done much to support health and wellbeing in the last year. As we step forward, opening up conversations about money, pensions and financial wellbeing will be all the more relevant to us as a society, as we consider how best to provide for ourselves and each other.
Jackie Buttery is benefits and reward lead, and Daniel Gerring is partner, head of pensions, at Travers Smith LLP