It is vital that your employees have a good understanding of their pension and its importance, or a good ‘pension awareness’, for their own financial wellbeing and the wellbeing of your business. Helping your employees to have good pension awareness is not only fulfilling your duty of care to them, but is an investment in the success of your business. If you are not providing a decent pension scheme for your staff and educating them on the importance of paying into this, their wellbeing could suffer, as a result of financial stress, with the knock-on effect of increased absenteeism due to poor mental health. Here we look at what you can do to improve your employees’ pension awareness to benefit both them and your organisation.
The pressing need for pension awareness
According to Mintago’s research, 53% of employees do not know how much they have saved into their pension. A significant number of workers are not making the most of matched employer pension contributions to optimise their pensions, and will be in a precarious financial position when it comes to retiring.
Those who do not have a pension, or are not contributing enough, are not likely to be able to retire at their desired age, but will have to continue working to live and afford essentials. In fact, according to our research, 77% of employees worry that they will not be able to retire at all, which is partly due to the cost-of-living crisis. Furthermore, only 30% of employees surveyed said that they had a specific strategy in place for saving for retirement.
The anxiety caused by a lack of preparation can considerably reduce employees’ financial and overall wellbeing, resulting in increased absenteeism due to stress and mental health issues. However, this can be avoided by improving your teams’ pension awareness and enabling them to plan for retirement in time, as recent research suggests that those who plan for the future are three times more positive about their finances than those who do not.
The power of planning ahead
Encouraging your employees to plan for retirement early in their careers is a sensible strategy, as the younger your employees are when they become pension aware, the better for both them and your business. Starting their participation in a pension scheme early will reduce the financial pressure on your employees, as their monthly contributions will be lower.
A general rule for good pension planning is for an individual to take the age that they start paying into their pension, half this and then contribute this percentage of their income to their pension each month for the rest of their working life. So, an employee who is pension aware and begins contributing to their retirement at age 20, would only need to contribute 10% of their total income every month, while an employee who is 40 when they start would have to contribute 20% of their income every month to retire comfortably. This would be far more difficult for the older employee and could put undue pressure on them.
Empowering your employees to make the right choices
As an employer, you can play a pivotal role in improving this situation and encouraging your employees to become pension aware throughout their careers. This support is very much needed, as evidence suggests it has been greatly lacking. A recent Mintago survey of 365 decision-makers in UK organisations found that 60% of participants did not think their organisation provided adequate support to help employees better understand their workplace pension contributions and savings. In addition, over a third (36%) said their business used auto-enrolment without providing any further pension guidance to employees.
By informing your employees about the risks of not saving enough towards their pension and starting an open conversation about ways they can optimise their pensions, you can help them to feel empowered to make the right choices for their future. In addition, by providing your employees with the tools and education they need to learn about pensions and why they are important, you can make sure that you are doing everything you can to take care of their overall wellbeing.
How Mintago can help
With Mintago you can easily help improve your employees’ pension awareness and enable them to plan for a comfortable retirement. Our user-friendly platform has various invaluable tools that can help them to gain a greater understanding of their pension and manage it with ease. For example, the Mintago Pension Dashboard allows full pension management and provides a clear visual aid for your employees to see just how much they need to save to achieve a financially sound retirement.
Mintago’s Pension Hunter service also helps your staff track down any lost pension pots they have from previous employers, to ensure they make the most of their hard-earned pension contributions and are in the best possible position when they come to retire. They can also choose to consolidate their pensions to make managing them easier.
In addition, Mintago’s educational library has a wealth of information for you and your employees to learn everything needed to make retirement planning simpler, and our financial wellbeing experts are always on hand to answer any questions that you and your employees may have about pensions and how to get the most from them.
To find out more about pension awareness and how Mintago can support your business and employees to make the most of their finances, get in touch today.