Since the introduction of auto-enrolment in 2012, the average amount being paid into a workplace pension scheme is down by almost a third. Recent figures from the Department of Work and Pensions (DWP) show a drop of 30 per cent from April 2012 to April 2017.
One explanation is that since the introduction of auto-enrolment, many people are saving into a pension scheme for the first time – and those people are more likely to be paying the minimum amount. As the amount being paid into pension schemes drops, the number of people contributing to a scheme is rising: figures from the DWP show that in 2017 the percentage of employees paying into a workplace pension rose to 84 per cent – a rise of seven per cent from 2016.
While it’s good news that more employees are saving into company pension schemes, the fact that many are only putting the minimum aside suggests that the benefits of a pension scheme aren’t fully realised.
To increase the amount employees save into their pension schemes, effective engagement and education is critical.
Benefits of engagement
The repercussions from not being compliant are well known, but how well-understood are the benefits of effective engagement?
At a time when individuals change jobs perhaps more frequently, recruitment and retention have become two key words in HR. And a good pension scheme, when well conveyed, is one of the key benefits you have to offer your workforce.
Additionally, with so many communications coming from HR, it is arguably the best placed team to convey this information.
Buy-in from senior figures for increased time and money spent on pensions engagement isn’t always easy though; highlighting the benefit to business of effective communication about a good workplace pension scheme can do wonders in helping secure support.
One of the biggest hurdles for many companies is that those disseminating the information – those in HR or payroll – are not pension experts themselves.
For smaller employers especially, this is entirely understandable as many SMEs don’t necessarily have staff with the capacity to fully understand the range of pension schemes and changing legislation surrounding auto-enrolment, let alone have time to devise an engagement strategy. It’s in these instances that external training is most valuable for both employer and employee. Once the hard work is done demystifying the pension process, continued engagement becomes considerably easier.
One size doesn’t fit all
Every employee will have different needs and financial pressures depending on where they are in their life and career – and pensions advice needs to reflect that. So messaging needs to be targeted – a young graduate employee will respond better to the advantages of starting to save early. A new parent may be more concerned about how their child will be cared for should they unexpectedly die. An employee in their fifties or sixties may be starting to think about partial retirement.
A good way to approach this is with the use of case studies based around individuals at varying stages in their lives and careers highlighting the pension scheme that best suits each person featured.
No jargon, please
The world of pensions is full of jargon – if you don’t understand the terminology, your employees certainly won’t. Use easy to understand, plain speaking language, explaining and contextualising where necessary.
Pensions needn’t be dull
Finally, have some fun. Consider using well-known songs as hooks to present key messages. This approach works well across all platforms and all ages from live engagement sessions where we play music, to social media where imagery comes to the fore.
David Boardman is director of communications and engagement at MyCSP