How do pension reforms affect employers?
The pension freedoms have not only given consumers greater flexibility, they have also impacted employers. As pensions continue to sit high on the agenda for the government, HR professionals need to recognise that as a result of all these pension changes their employees will need a lot more assistance. The workplace can be a great setting for retirement planning discussions to take place.
The government is driving pension changes and its efforts must filter through to employers, focusing on educating employers how to communicate the retirement options to their employees. As the retirement landscape changes the government should look to adapt people’s thinking around retirement, perhaps eliminating the word pension altogether, so that HR professionals can discuss retirement planning in more general terms with workers.
This will help employers to steer their staff into looking at pensions as a long-term saving vehicle and to make the most of what their companies can offer them through initiatives such as auto-enrolment. The government should open up platforms whereby HR professionals can discuss different approaches to workplace pensions, perhaps through seminars, meetings and leaflets specifically targeted at HR teams.
Contributions from SMEs into pension schemes have grown, which is a positive trigger for employers to drive home the message of saving for retirement. The government must continue to focus its efforts on smaller businesses that may not have the same capabilities to expand their workplace pension offerings, or even have a dedicated HR member of staff like larger businesses.
It may also be worth the government creating a new role like a 'people’s savings champion' to support pensions minister Ros Altmann and help change assumptions around pensions and retirement. From an HR perspective, employers would benefit from having someone of this position as a front-runner to help adapt attitudes towards pensions and savings, starting from the top.
Altmann said: "The best way to impart financial education is via the workplace". HR professionals need to ensure that their employees are given access to the right information and support to ensure they are making the most of their contributions.
HR also needs to recognise the importance of obtaining appropriate guidance on workplace pensions. When it comes to auto-enrolment, for example, many firms haven’t factored in the extra cost in working with an employee benefits specialist to support their workers and the company. It takes time to research the best advisory firm, and it is essential that employers do not rush and pick someone who has the right skillset for the business.
On top of this HR professionals should be encouraged by the government to be able to turn to other parts of the business that will play a part in progressing retirement education. These may include internal communications, intranet portals of information, and inductions for new hires.
Employees should be able to rely on employers, with assistance from the government, to help them understand their choices and make decisions that will give them financial benefits that support their future.
Elliott Silk is head of employee benefits at Sanlam UK