The challenge for employers is providing easily-accessible information about complex issues in a simple and conversational way.
Pensions are complicated. They are often tricky to comprehend for professionals let alone the ‘average’ employee. The past 20 years has seen drastic change; from a landscape where the onus for provision lay with the employer through to now where employees have to make decisions to provide enough for their future. The message is that unless you save enough now you face an uncertain future and a possibility of working long into your later years. That’s a tough conversation to have, particularly for an employer who is looking to maintain an energised and productive workforce. That is just one of myriad reasons more and more pension provision is outsourced to third parties.
Now that the norm is for the employee to make decisions to influence their future outcomes, another challenge presents itself in how they interact and understand decisions over how much to contribute, and where to invest that money.
In addition, the past few years has seen the introduction of flexible retirement options and members needing to start considering how they align their investment choices with future retirement outcome decisions.
Some companies and providers have embraced this challenge and provide tools to help guide employees through this decision process. It’s time to take a step back and ask if you are doing enough to communicate the information employees need to make informed choices.
Changes in the workplace are not making this communications process any simpler. Employees are now almost as likely to be self-employed contractors as full-time workers. They may be working in remote locations – and increasingly from home for some of the working week. So traditional methods of communication are not going to reach all your employees all of the time. They are also likely to be far more generationally diverse, with all that means for the impact various financial communications will bring. In short, the financial focus of a new young employee is going to be far different to that of a more established employee who might be approaching retirement. So just how do you communicate successfully in this new working world?
The good news is that technology is here to help; to tackle both the need for education and guidance as well as provide a channel to reach your entire diverse workforce. After all, technology now features in so much of everyday life. When it comes to banking online, for example, 71% of the UK population are already accessing their personal finances via this route. Add to this the fact that four in 10 now use mobile banking apps and we can clearly see that a growing number are both familiar with such technology and happy to use it to take control of their finances. Pockets of the pensions industry are making great strides to catch up but there is some way to go.
This familiarity comes with a major issue – the need for the technology used by the pensions industry to replicate the ease of access and functionality employees have come to expect from the technology they use in their everyday lives. If it doesn’t have all the bells and whistles they’ve come to expect from consumer applications your messages will simply not get through. The result? Employees who are disengaged from the vital information they need to make those all-important financial decisions around their own futures. That’s a big risk and one that, unless addressed now, will leave a raft of employees facing financial difficulty in their later lives.
There is good news. Outsourced pension provision is working hard to address the communication challenges presented by the modern incarnation of the working experience. Outsourcing benefits employers by lifting the burden of administration and regulatory compliance from their shoulders, as well as enabling access to the best and latest technology and communication channels. They’ve been able to, and will continue, to invest on behalf of their entire customer base in a way a single employer could only dream about if they had to make that investment on their own.
This does mean that it’s vital you pick an outsourcing partner who can demonstrate their understanding of communications as well as provide a technologically-advanced communications package as a critical part of what they offer to you and your employees. That means a model that not only performs with the same kind of technical functionality an employee might expect from their consumer experience, but also one able to address the very different requirements of your diverse workforce, now and in the future as consumer needs continue to shift and evolve.
It’s also not just about employees seeking answers to vital financial questions. It’s important to you as an employer to ask about how this technology can benefit your business. For as well as empowering the employee, the data such technology can provide can also be used to gather a deeper understanding of your workforce; providing an insight into their current financial picture and potential future state. You can then establish what matters to employees while supporting future workforce planning and longer-term strategic issues.
Our own experience suggests that well-timed communications can lift response rates – with 90% of employees logging on when those communications are presented to them in a relevant and timely way. Not only that, but having logged on almost two-thirds of members have reviewed their investment choices and contribution levels. That’s a powerful indication that successful communication really does empower employees to grasp their savings decisions with both hands.
The challenge we’re all facing is a more generationally-diverse workforce, with a wider variety of working statuses, requiring more complex information in simpler ways, delivered through digital channels. Sounds simple enough, right?
Third-party providers, who have the scale and understanding of a broad diverse workforce with access to the latest technological enhancements, can meet the needs of each individual. All this, at the same time as providing a powerful platform that allows employers to analyse those needs and even more accurately predict what they might be in the future. Pensions may appear complicated on the surface, but making them exciting and engaging for everyone need not be complicated at all.
Harriet Hayward is a client relationship manager and Tom Higham is communications lead at LifeSight by Willis Towers Watson