Top tips on how to keep employees engaged with their pensions during the pandemic

At a time when many households are surviving on a reduced income, the need to keep employees engaged with their pensions is important, but communications must be handled with sensitivity. Some employees may be furloughed and households under financial pressure may see pensions as the least of their priorities. Even if different approaches are used for different staff cohorts, an employer will not have visibility on the job status of an employee’s partner and other family members.

However, according to BlackRock’s 2020 [defined contribution] DC Pulse survey, published in July 2020, three-quarters of pension members said the pandemic made them think carefully about their financial future, so giving employees access to constructive help and assurance should be well received. Employers could, for example, put together a programme of continuous communication including tailored emails, e-newsletters, surveys, quarterly investment reports, and webinars on financial wellbeing, market updates, end of tax year planning and pension consolidation.

Keep communications personal and on point

Kathryn Fleming, senior DC consultant at Hymans Robertson, says: “Some sort of empathy and framing in any communication is important if it is going to be about pensions.”

Fleming suggests that there is an opportunity for employers to build pensions into a more holistic benefit conversation, issuing a reminder of all the protections and benefits that employees have in place with their DC pension fund, such as death benefits and serious ill health benefit.

“That said, people are looking for a sense of ‘normal’ to hang onto right now,” she adds. “So pensions shouldn’t be lost in the conversation. We have seen clients encourage an annual pensions health check asking: how much have you saved so far, are you on track to retire, are you set up to look after your loved ones, what can you expect to receive when you reach retirement.”

Consider expanding the conversation.

“Financial education for all employees is especially important in the current climate as it can help the workforce explore ways in which their daily finances can be supported,” says Jonathan Watts-Lay, director, Wealth at Work.

While social distancing rules mean that many employers have had to restrict attendance at face-to-face seminars, Watts-Lay says that digital solutions such as interactive online seminars and webcasts are highly effective. “For example, following an online financial education programme, we have found that as many as 85% of a company’s employees take action by requesting further guidance or advice,” he says. “Then, for those who need help at retirement, virtual one-on-one guidance sessions can be delivered via a video call or telephone. This approach offers employees the support needed to help them clarify their financial situation and gain a deeper level of knowledge around their retirement income options.”

Seek feedback on pensions communications

“Use mini polls to gauge employee sentiment,” says Damian Stancombe, partner at Barnett Waddingham. “Employers may think about sending out an email about pension shortfall and the need to boost savings, but they need to understand sentiment first, or it could blow up in their face.”

He suggests that employers run a series of fortnightly poll surveys with six to eight very broad questions in areas such as health, wealth and mindfulness, and then drilling down to see how sentiment has changed. They could for feedback on how the communications are hitting the mark by way of length, frequency and style of language and act on that feedback.

“For example, we know that webinars should be openly available, so employees can access them after hours,” adds Stancombe.

Warn employees about scams 

There has been a rise in the numbers of pension scheme members requesting transfers, as is their right, but employers should make sure that theur employees have a clear understanding of potential scams. Forewarned, they will be better prepared to resist what can seem tempting during a time of high anxiety for many. “Vigilance and empathy can help to forge stronger bonds of trust with the people on whom [the] business depends,” says Steve Butler, chief executive, PS Aspire.

Tap into the new enthusiasm for understanding stock market investment

“There has been a big increase in interest in investment through headlines such as Reddit and Gamestop,” says Nathan Long, senior analyst at Hargreaves Lansdown.“Suddenly employees in pension schemes are realising they are investors, so [employers can] drive that interest. For example, [they shouldn’t] shy away from explaining how their money is invested. The environmental, social and governance (ESG) phenomenon is also overlooked but there is a real change in people beginning to care about this.”

This means being honest about DC investments. “Some staff will have peeked at their annual pension statement during the pandemic and turned white, but [employers] could point out how investment markets perform, reassuring that, over the long-term, the pension timespan, these peaks and troughs even out,” adds Butler.

Short-term market events typically reverse and younger members investing for decades should be comfortable to ride through stormy periods, in the knowledge that they have the time for markets to recover, says Alex Cave, head of UK institutional defined contribution at BlackRock. “While it is stressful to see stock markets down 10% or 20%, members can also take comfort that their contributions are buying those assets at a much lower value than they were, so that when the assets recover, they will see additional value,” he adds.

Promote broader support

Taking a compassionate and supportive approach not only helps alleviate the concerns of individuals but will be appreciated by the broader workforce.

Watts-Lay says that employers that take steps to help their employees take control of their finances, including their pensions and retirement savings, during this uncertain period will reap the rewards in terms of their future reputation, and the retention and motivation of employees.  “The link between money worries and stress, lower productivity and absenteeism are increasingly recognised by employers,” he says.