There is no doubt that 2020 will require a major financial rethink for many of us, with everyone’s finances affected in some way by the COVID-19 pandemic. Some will have experienced the severe financial shock of being made redundant or suffered a substantial reduction in earnings through the Coronavirus Job Retention Scheme.
Others will have seen little change to their income, but will have modified their money habits, with their normal spending patterns put on hold.
At a time when certainty is in short supply, helping employees put themselves in control of their money is one area where employers can make an immediate difference. That could include support with needs such as covering day-to-day living expenses and building a financial safety net, through to more in-depth retirement planning.
Saving for retirement is a lifelong process, so making sure that pensions are integrated with other aspects of financial wellbeing helps employees keep track of retirement goals as part of the ‘big picture’ of their finances.
Too often, workplace pension schemes are separate from other savings and distanced from employees’ broader financial planning. As a result, instead of being proud of planning for the long term, employees aren’t engaged with their retirement savings and can find it hard to visualise the benefits of saving into a pension.
Technology has a major part to play in bringing pensions closer to other aspects of employees’ financial lives and helping them to take control of their retirement savings. Aon is embracing this with the latest version of our Well One Money app. Employees who save into the Aon Master Trust or Bigblue Touch Group Personal Pension as their workplace scheme automatically have access to Well One Money to support their financial planning.
By using features like Open Banking to build a picture of an employee’s spending and saving habits, Well One Money can help employees better-understand how they spend and save at present, and where they might be able to make changes to achieve longer term goals such as saving more for retirement. Integrating the app with Aon’s workplace pension schemes means that employees can seamlessly manage both their long-term and short-term financial goals in a single place.
Well One Money is also a great platform for using nudge techniques based on employees’ personal circumstances to support better money habits. Seemingly impossible undertakings, such as building a financial safety net or improving employees’ standard of living for retirement, can become a reality when supported by small, achievable changes and suitable messaging.
Even before the COVID-19 outbreak, employees were already asking for more help with their financial wellbeing. According to research from Moneyhub, 45% of employees said that their biggest priority was to simplify the process of planning for the long term. For those aged below 55, this is particularly pressing, with over 80% of respondents aged between 35 and 54 saying that they need help. This is backed up by findings from Aon’s 2018 Living the Dream survey of defined contribution (DC) pension scheme members, where only 41% felt they were saving enough for their long-term needs.
Around a quarter of those surveyed by Moneyhub said that they also wanted simpler ways to manage bills (24%) and to build up a savings buffer for the future (24%).
This is a time for employees to review, reshape and reconfigure their financial goals and retirement plans. And, technology such as Well One Money, in conjunction with Aon’s Master Trust or GPP arrangement, can now make those goals more tangible and trackable.That, in turn, will make sure pensions can take their proper place as part of good financial planning.
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