Old man bench

Due to increased life expectancy and the removal of the mandatory retirement age (in 2011), employers are experiencing an ageing workforce like never before. For this reason – along with auto-enrolment and the recent pension reforms – employers need to take a more active role in advising their workforce on how best to manage pension and retirement plans.

Likewise, employees want advice to help make decisions about their financial future. According to research commissioned on behalf of the Open University Business School (OUBS) two-thirds (64%) of UK employees have never received personal finance education. The research also found that, while 81% of employees want personal finance help from their employers, only 7% of those who have received financial education obtained this from their employer. How to invest their pension, when to retire, and how to start receiving benefits are all questions that employees are looking to address.

Given the current lack of understanding amongst the workforce, many older employees are putting off retirement planning, yet if they just had the information they needed to understand the options available to them, they could actively make informed choices for their future. This could be as simple as wilfully choosing their retirement age.

According to results of the Chartered Institute of Payroll Professionals’ (CIPP) annual survey released in September 2015, British workers across all age groups are failing to adequately plan for retirement, and worryingly, 36% of those aged 51-60 admitted they had no pension provision at all. Lindsay Melvin, CIPP CEO, said: “In these uncertain economic times we would hope most people are thinking about their future, but these results show over a third of those towards the end of their working lives are not planning financially for their retirement and some are not even sure they will have enough to live on.”

Furthermore, with the life expectancy beyond typical retirement age increasing from 16 years in 1990 to 20 years in 2015, it has never been more critical for employees to get help with their retirement planning.

Here are some tips for supporting your employees with their pension and retirement plans:

  • Talk about retirement planning in the workplace
Make retirement planning education a focus across the business, including internal communications, intranet portals and inductions for new hires. Understand the impact of your employee benefits package and the message it is giving out. A contributory pension, for example, is viewed as top on the wish list of employee benefits. Pension contributions from SMEs are on the increase which is a big positive step as it highlights the value placed on saving for retirement. Consider offering this if you don’t already.
  • Understand that retirement can take on various meanings
Listen to the concerns of your workforce and realise that life stage will affect attitude towards retirement. A younger employee, for example, will view retirement as so far removed from their current position, that they lack interest and feel it is irrelevant to them. To others approaching retirement, it could mean freedom to indulge hobbies, spend time with family and travel. Yet for those who lack the confidence and awareness, just thinking about impending retirement will be overwhelming, while others may be anxious about a reduction in standard of living.

And for all employees the choices they need to make regarding their pension – how to invest, how much to contribute, and when to retire – can be intimidating for those that are not financially literate.

Understand your employees’ concerns and ensure they are given access to the information and help they need.

  • Tap into available resources to provide guidance and education
Help employees to get a clear picture of the types of choices available and what they will mean for their future. Use resources available from your pension provider, along with guidance provided by Pension Wise, TPAS, The Money Advice Service and Citizens Advice (for those approaching retirement). You can use these materials for internal staff communications, along with information on how to access education and online tools.
  • Consider offering tailored expert advice (at a viable cost)
Expert advice that leads to personal recommendations is valued highly amongst those planning retirement, yet this option can be perceived as expensive and only viable for select senior staff (if at all). However, engaging an online advice service (or robo-adviser) can offer employees access to expert financial advice through online web apps or wizards for a fraction of the cost of face to face advice. One example is Wealth Wizards, which offers fully regulated independent advice via online apps, which are designed by experienced chartered financial planners and investment experts. These apps deliver bespoke recommendations online, and are supported by telephone help and access to a chartered financial planner if needed.

Employees should be able to rely on employers to understand their choices so they can make solid, informed decisions to financially support their future. In turn employers will reap benefits of a more satisfied, motivated and retained workforce.

By Andrew Firth, CEO, Wealth Wizards