From a starting point of inadequate financial literacy, which has caused issues of distrust and indifference amongst the UK workforce, employers must now look at introducing fresh approaches that alter perceptions and remove the barriers to long-term retirement saving.
Based on a series of focus groups, our recent Financial Frontiers report highlighted some of the fundamental reasons behind employees' reticence towards saving and presented a number of key considerations for increasing engagement.
Why aren't employees saving?
A lot of the current attitudes toward savings have been compounded by recent events. In today's professional landscape, against a backdrop of economic instability and the collapse of once-stable financial institutions, a growing number of people are simply nervous of change, and reluctant to commit their resources for long periods of time.
In addition, an increasingly flexible working culture, and a perception that many will work past retirement age means that people want to have control of their money today.
This 'live for today' mentality among employees could be put down to a variety of factors. Our research suggests it ranges from a fatalistic outlook on the possibility of dying tomorrow and a paternalistic belief that someone will look after us to a basic inability to conquer the maths required to understand the savings process.
Complexity of products was raised as a major issue in preventing people saving into pension funds - a 'smoke and mirrors' perception spread by confusing literature and jargon flooding the market.
The solution needs to be driven by employers, for the simple reason that interacting with and engaging employees will help ensure that auto-enrolment is valued - by those the system was created to support - as a key component of a company's rewards and benefits package.
Delivering the message
As well as clear, jargon-free language, a crucial factor in communicating with employees is the format and platform through which it is received - enforced by the research participants who said they were likely to throw most pensions literature in the bin. Many commented that they used magazines and newspapers, which are perceived as being more concise and credible, to help them make better financial decisions relating to savings accounts, shares, credit cards and mortgages.
HR professionals can adopt the best traits of newspapers and magazines when communicating with employees - using eye-catching headlines, infographics and human interest stories.
Take relevant advantage of social media
The report also urges professionals to consider the full capability of social media, associated with information sharing and collaboration. At present, the industry utilises social media tools such as Facebook, Twitter or text messaging, to varying degrees of success, with many finding these platforms too public and impersonal.
Our findings suggest that when making decisions employees prefer dedicated financial online sources where they can directly access anonymous comparison statistics and, importantly, peer-to-peer recommendations and product reviews. They would rather have financial information sent through to them on emails that link to corporate intranets, pension websites and reward portals.
Online reward portals
We believe that a single, consolidated online portal will have more value and use for employees, enabling them to view all of their financial and non-financial rewards from working with the company as well as creating a platform for communicating with their employer. Direct access to information on all aspects of their savings packages - from pension information and flexible benefits to share arrangements and car leasing plans - will inculcate a greater sense of responsibility and develop a broader financial picture. Interaction should also be encouraged through the use of discussion boards dedicated to benefits and pension questions and peer-to-peer recommendations, which can be monitored by the HR team to ensure any queries are answered.
Where a lack of understanding currently leads to apathy, clearly communicated information on retirement planning will cut out the jargon and help develop a more financially literate workforce. By taking just a few key steps, organisations can ensure their employees begin to understand and value pensions as an appropriate retirement savings vehicle.
Girish Menezes (pictured) is a principal in the global benefits administration practice at Buck Consultants
