5 strategies your manager can employ to improve your retirement savings plan
The Department for Work and Pensions has launched a new Pension Commission, aiming to improve retirement savings in the UK. This initiative comes at a time when research shows that more than four in ten working age people aren't saving enough for their retirement, and 14.6 million people are under-saving.
To help employees engage with their pensions and savings throughout their careers, employers can work with financial wellbeing, retirement, and workplace savings firms. These collaborations can provide valuable guidance and education, helping employees make informed decisions about their retirement savings.
A concerning fact is that a fifth (21%) of employees are unaware their pension is invested, and 39% don't know what their pension is invested in. To address this, early-career education should cover how pension schemes work, employer and employee contribution levels, pension tax relief, available funds, and fund switching.
Companies such as Willis Towers Watson (WTW) and IK Partners (through acquisition of Lohoff Pension Services) are collaborating with pension providers to support employees during their careers with financial advice and education. WTW's WTW-Rentnergesellschaft, Berenberg in cooperation with Lurse, and IK Partners' services offer innovative pension outsourcing, integrated consulting, and administration solutions.
Mid-career education should focus on pension and retirement savings targets, income generation in retirement, and investment management. At retirement, education should cover income generation from pensions and savings, managing money in retirement, and seeking help such as investment advice and pension consolidation services.
One-to-one financial guidance or coaching sessions can be particularly useful for those needing a deeper level of knowledge about their pension options, especially at retirement. Access to investment advice can be beneficial for those with complex questions about their pensions and retirement income.
Interestingly, 41% of employees would increase their pension contributions if they knew their pension was invested in funds that aligned with their values and beliefs. Making more information and guidance available in the workplace can help responsible bosses increase their employees' pension savings.
Despite these efforts, almost half (45%) of workers believe they will never be able to afford to retire. However, a small increase in pension savings can make a significant difference to one's final pot. For instance, Wealth at Work suggests that someone in their 20s, saving just 1% more each year into a workplace pension, could boost future savings by 25% if their employers matched this.
Financial education workshops can be interactive and tailored to each demographic in the workplace by career stage. These workshops can help bridge the knowledge gap, empowering employees to take control of their retirement savings and secure a comfortable future.
