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
- Understand that retirement can take on various meanings
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
- Consider offering tailored expert advice (at a viable cost)
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