Outside of the interested few, this can undoubtedly be an uphill struggle. However, if we do not address the under-saving culture in the UK, we will be faced with an ageing population with insufficient money to help them through later life.
The introduction of auto-enrolment into a workplace pension was a step towards solving this problem, and in April 2019, contribution rates for employees are due to step up again. While auto-enrolment has been a seemingly successful social experiment in harnessing natural inertia, the next increase in contributions will have a meaningful financial impact on many employees.
Against a backdrop of Brexit, this may feel like small fry, but post-Brexit there will be a drive to recruit and retain more skilled employees. A well-designed pension scheme forms a key element of a total benefits package that will attract the best candidates. It makes sense to spend some time and effort demonstrating this real value to staff.
Linked to this is the simplified annual statement, a helpful step forward for ordinary people saving into workplace pensions. It is hard to believe we have taken this long to realise that a simple, attractive two-page statement is more likely to be read and get traction than a long, dull, impenetrable jargon-filled communication. So, employers’ next annual benefit statement might need to look quite different compared to what went before; this can only be a good thing if it means employees actually paying attention and taking action if needed.
This is a good start; however, we still need to press on to make the pensions dashboard a reality, so that everyone can access and manage their retirement savings on one online platform.
This work requires a focus on the data we are holding for employees. The Pensions Regulator (TPR) is doubling down on its efforts to force pension scheme trustees and sponsoring employers to get their data into shape.
This is particularly important at the other end of the employee journey. Those approaching retirement are facing challenges over how they take their benefits. Freedom and choice mean that such decisions are more varied and complex than before, especially for employees with benefits in defined benefit (DB) schemes. It is easy to assume that these members are well taken care of, but these are the individuals most likely to be vulnerable to scams and poor advice, specifically when it comes to transfers.
In October 2018, The Financial Conduct Authority (FCA) issued new guidelines for all organisations involved in pension transfers, with the aim of providing greater protection for consumers. The FCA is also working with TPR to ensure that pension schemes are properly communicating the risks of transfers to their members.
Faced with an almost constant stream of regulatory initiatives, the focus for employers will be on the employee experience. Get that right and employers can reduce the risk of those approaching retirement making poor financial decisions and help younger, financially stretched employees see the value of putting enough money into their long-term savings to avoid disappointing their expectations.
Lesley Alexander is vice president at The Pensions Management Institute