Top tips for boosting employees’ pensions knowledge 

Need to know:

  • Employers can tailor content and communication channels to different employee groups to help with their pensions knowledge.
  • Losing the jargon will make the language of pensions easier to understand and more relevant to staff. 
  • They could invest in financial coaching for a more personal approach to pensions education.

Workplace pensions are one of the most valuable elements of the benefits package. What is surprising is the lack of knowledge that employees have about these. 

With Drewberry Insurance’s Workplace pension survey, published in March 2022, revealing that 41% of respondents did not understand their workplace pension, employers need more effective ways of helping their staff gain the knowledge they need to plan for their retirement. From tailoring pensions education to different employee groups’ needs, to bringing in pensions experts to lead sessions, here are six ways for employers to boost workplace pensions knowledge and comprehension. 

Tailor the strategy 

When it comes to educating their employees about benefits and pensions, there are two important considerations for HR leaders, says Tony Guadagni, senior principal at Gartner HR. “Firstly, they must consider what communications platforms should be used to deliver educational content to employees,” he says. “Some organisations might employ thousands of staff, so they must consider how best to deliver their message, for example, via in-person meetings, email or social media.”   

The content and communications strategies must also be tailored to different employee groups. “For example, a recent university graduate is less likely to have an understanding of the pension scheme compared to an experienced senior-level employee, so it’s important that the content is personalised to their specific needs,” adds Guadagni.  

Tackle the terminology 

Changing the language around pensions could go a long way to making the subject easier for employees to understand. For example, instead of using the words ‘pensions’ and ‘retirement’ which can have negative connotations, employers could use ‘long-term savings’, says  Emma Hadley, head of pensions, employee benefits division at Howden Employee Benefits and Wellbeing.

“Instead of ‘investment’ use the term ‘funding adequacy’, as most employees don’t need to be picking or thinking about the investment,” she says. “Employers should trust the default fund and instead, the language of communications should focus on funding a good pension pot. The narrative and the terminology needs to change in a way that encourages employees to focus on the pot and what good contributions look like.” 

Teach through technology 

Providing online access to the workplace pension scheme allows employees to log in to see their pension just as they do with their online banking. Adrian Firth, financial education consultant at Mattioli Woods, says: “They are more likely to appreciate the benefit of tax relief and the employer contributions on top of their own payment when they can see it laid out before them.” 

Several workplace pension providers offer mobile apps that encourage employees to be more engaged with their pension and proactive in their retirement planning.  

Communicate more frequently 

Employers need to get into the rhythm of communicating pensions more frequently, and there are three distinct parts to this; joining, accumulation and decumulation. “When someone first joins, rather than simply sending out a welcome pack, send out an introduction email, have a welcome meeting and encourage personal checklists of what they want to achieve and the lifestyle they want their pension to fund,” explains Howden’s Hadley.  

During the accumulation phase, it is all about building the pot, so targeted member emails and seminars, plus one-to-one guidance sessions will equip staff with relevant knowledge of their finances. “In the decumulation phase, consider running retirement workshops or offering financial advice as well so that employees understand the options open to them, such as drawdown and buying an annuity,” adds Hadley. 

Provide access to financial coaching  

Support in the form of financial coaching or advice is critical to ensuring that employees can identify what matters to them and make informed decisions, says Jen Norris, director of pension management firm Isio. “Some employers might see providing such individual support as an unaffordable cost, but imagine the benefit spend that’s being lost on the many employees who have little to no appreciation of their total reward,” she says. “Improving understanding and confidence with pensions and other finances could lead to lower staff turnover and higher retention. If employers invest in this, they’ll quickly get closer to seeing a better return on their benefit investment.’’ 

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Target younger employees 

Gen Z and Millennials are arguably the most difficult to engage with pensions and retirement planning, so a tailored, personal, communication approach is required. Apps are one of the best options as they enable ongoing nudges and pushes to be sent, says Rob Chandler, consultant at pension scheme advisor Cartwright. “The apps must have an efficient way of modelling retirement outcomes while being integrated into overall financial planning,” he says. “The priority is for individuals to contribute, above minimum auto-enrolment levels, but also to educate so that they understand that even a moderate increase to contributions, over the lifetime of their whole employment, is affordable and doesn’t need to compete with wider financial decisions and pressures.”