Personalised financial education becoming more important

At the end of July, when the government announced that its guaranteed guidance would be provided by independent organisations rather than pension providers, it settled most of the questions that had been circling the industry since the initiative was introduced by Chancellor George Osborne in the March Budget.

Before the announcement, 33% of employers that responded to research published by Jelf Employee Benefits in early July expected they would have to fund financial guidance for their entire workforce when the legislation took effect in April 2015.

Fortunately, they were wrong, but 87% of respondents agreed that the government’s pension reforms will create a need for more financial education in the workplace.

Personalising pension communications

Some employers are getting a head start by personalising their financial education programmes and pensions communications to really engage staff.

For example, Telegraph Media Group increased the number of employees who make additional voluntary contributions (AVCs) into its trust-based defined contribution pension by sending out personalised newsletters.

Meanwhile, another media organisation, IMG, and law firm DAC Beachcroft have launched personalised financial education programmes for their staff. The programmes, provided by Nudge Global, use HR and benefits data to profile employees and pre-empt their financial needs.

Tim Perkins, director of Nudge Global, said: “Employers are in an unrivalled and unique position to engage with their staff on money matters. As a result of auto-enrolment, employers know who their employees are, where they live, how much they earn and how old they are.

“Some employers also know an employee’s dependant status and, where they have a flexible benefits scheme, their interests from their benefit selections. Some employers are even assessing employees’ attitude to risk from how they manage their pension and factoring this into the personalisation of financial education.” 

What the guidance guarantee will look like

The government’s guidance guarantee, which will bring together a range of delivery partners, including The Pensions Advisory Service (TPAS) and the Money Advice Service, will be offered through a range of channels, including online, phone-based and face-to-face.

Michelle Cracknell (picture bottom left), chief executive of TPAS, said: “There is a clear need to help people with the decisions they make at retirement. We know from our helpline that people struggle with the current options and this will be even more true in April 2015.

“[The guidance guarantee’s] success will depend on the industry working together, encouraging people to take up the offer and providing the options for the next steps at the end of the session.

“Financial education in the workplace will help employees get more out of the guidance session because they will have better awareness of the benefits and services that are available from their scheme and the things they should be considering.”

Perkins added: “With financial education being taught in schools from September, and such clear need for financial education among adults as well, we encourage the government to introduce tax incentives for employers to financially educate employees.”