Auto-enrolment has changed the pension landscape for employees and many have questions about their entitlements. Supporting employees with these needs doesn’t need to be a huge expense or strain on resources so here are five tips that businesses can take to ensure they support their employees in the best way.
1. Develop a communications strategy
Simply making employees aware of the changes, and of the further support available to help them make informed decisions is a start. This will encourage employees to come forward and ask the right questions.
2. Provide specific, dedicated support
Build on this communication by introducing either face-to-face or web based education seminars. This will help employees to not only understand their options in greater detail, but to see the impact and learn how to make the best decisions for their own financial circumstances.
3. Don’t forget younger employees
Planning for retirement doesn't start at retirement. The earlier people start saving into a pension the better. Employers can engage younger staff and help them understand that this is a step towards improving their well-being later in life.
4. Review default/ lifestyle funds
Most default/ lifestyle funds may no longer provide suitable investment strategies for employees who don’t intend on using their pension to fully fund an annuity at retirement. In the vast majority of DC schemes, significant numbers of employees are in the default fund. So employers need to review these investment strategies to make them relevant to the post pension reform era.
5. Pension Wise
If employers intend to refer staff to Pension Wise, the Government’s free service, then they should make it clear what they can expect, that this service offers guidance and that it should therefore sit alongside financial advice rather than competing with it.
The UK Government’s auto-enrolment scheme was introduced in 2012 but was only aimed at larger companies. However, it is now starting to affect smaller businesses too, with all UK companies expected to be enrolled by 2017.