The government’s ambition is to drive better outcomes for members of defined contribution (DC) pension schemes to help ensure all savers achieve the best possible retirement.
This is a really positive direction for DC pensions as the management of schemes evolves to consider what members will receive in retirement; whether this is enough and how we can help them either by default or by nudging them into taking the right decisions are key factors for those involved either working inhouse in a reward team or as an advisor.
The principles of smart design and smart governance are vital to deliver good pension outcomes for members of DC plans. However, a smart approach to engagement is also key to ensure that the right messages are being delivered to the right people at the right time and in the right way.
There is a need to truly understand employees or members; as well as your objectives, this will lead to improved communication, engagement and, ultimately, better, more personalised outcomes.
As people start to consider their health, wealth and self, employers can be a big part of helping employees to plan for a financially secure future.
Pensions might not be the most captivating subject, hence the need to start with basic fundamentals of a workplace pension and communicate in an effective manner. It is important to link this in with the overall messages on financial wellbeing.
Employees’ financial lives are personal, unique, and at times can be complicated. When those worries are brought to the workplace, it can have a huge impact on the ability for employees, no matter their position, to get the job done and, ultimately, the bottom line.
With the recent cost-of-living crisis, it is important to help employees and also monitor any increased opt-out rate for pension. Any form of engaging communications around why it is important to save for the future is always welcome. There is a link between contributing to a pension plan and financial wellbeing.
Financial wellbeing is known by many names, like financial literacy, wellness, confidence or resilience, but put simply, it is about having a good relationship with money.
Financial wellbeing is about feeling secure and in control. It is about making the most of your money from day to day, dealing with different situations, and being on track for a healthy financial future. In short: financially resilient, confident and empowered.
People who experience financial wellbeing are less stressed about money. This, in turn, has positive effects on their overall mental and physical health, and on their relationships.
It is important now, more than ever, to help employees with tools for financial wellbeing.
Rashree Chhatrisha is reward director – pensions and benefits at Saga