HR's role in helping employees save for retirement
Many people are not saving enough for their retirement, and several high profile sources claim people just aren't interested in saving. How can HR ensure employees are financially secure in later life? Communicate pensions as a key benefit.
Opinions are often divided about who is responsible for looking after workers’ financial future. Our Ageing Workforce Study found that nearly half (44%) of employers think they should be primarily responsible for providing retirement benefits and 40% felt it was their responsibility to provide staff with a ‘comfortable’ retirement.
Meanwhile, our Global Benefits Attitudes Survey showed that many employees are trying to improve their retirement prospects, with some delaying retirement until at least age 70 (23%) and cutting back on spending (52%) to save more for their future. However, businesses need to do more to give employees the information and confidence to understand pensions and help them plan ahead.
Who is responsible for saving?
The overall responsibility is shifting towards the individual to make sure they save enough for their retirement. Part of the reason for this shift is that ‘jobs for life’ are diminishing and a 20-year-old today is likely to have around eight different jobs throughout their career, so it’s almost impossible for companies to provide a meaningful benefits package that covers an entire career. But what they can do is provide attractive pensions schemes for employees while they are with the company.
It’s not enough just to have a great pension scheme though. HR departments need to help employees understand how much they should save and what investment options are available. Many people aren’t saving enough because they don’t know what they’re aiming for. It’s like booking a holiday but not knowing the destination or where you’re going to stay – how can you budget for it? HR needs to engage employees regularly and in sufficient detail to help them make informed decisions about their financial future.
More often than not, a letter or a guide through the post ends up in the bin and internal meetings can get missed. So how can HR departments help employees understand pensions? In our Global Benefits Attitudes Survey, around one in seven (14%) employees said they use mobile apps or websites to track their retirement savings, while nearly one in six (15%) use these to get guidance on improving their financial situation. By adopting a consumer approach to pensions and using communication channels that grab the attention of your employees, you’re more likely to be able to cut through the apathy around pensions.
Communicate with employees
One of our clients uses an online game called Save your future to educate employees about pensions in a fun and interactive way through on-screen questions and answers. The tool tracks their answers and points them to relevant information. The company can also use the data to identify gaps in employees’ knowledge of pensions, and then tailor their communications accordingly. The game got 42% of the company’s staff engaged with pensions in the first year, with 77% playing the game more than once.
Another client uses an online portal to help employees build their confidence around pensions. Each person starts at the right level for them and moves up the ladder of confidence as they take more actions, from watching an animation about how pensions work, to making key decisions around their overall savings strategy. It’s crucial to build employees’ confidence in this way, to enable them to make their own decisions about their pensions and their broader financial future.
Whether it’s an online game, a series of workshops or a simple poster campaign, your pension communications should be positioned as a key benefit that ultimately helps employees feel empowered over their own financial future. By helping employees identify how much they need to save and providing them with the tools and support to understand and achieve their retirement goals, they are more likely to value your organisation and can afford to retire when the time is right for them.
Nigel McNeil is director of reward, talent, communication & change management at Towers Watson