Need to know:
- Initiatives that inspire employees to think about what their future might look like can help engage them with the retirement saving they will require to support this.
- Using terms that relate to present-day situations can make retirement saving feel more relevant to employees.
- Personalised tools and communications can provide context and ensure staff receive the messages that are most pertinent to them.
Saving for retirement does not tend to be an issue at the front of our minds, often overcome by competing priorities and immediate day-to-day concerns. However, the ability to afford to retire and to build up a sustainable income that maintains a decent standard of living is a pressing financial issue for both employers and employees, particularly as the population ages. Engaging staff with retirement saving can pose a considerable challenge, but there are steps organisations can take to address this.
Help employees to visualise the future
Encouraging employees to think about their lives in retirement can help them gain a better understanding of the income they will require, and the present-day action they will need to take to achieve this. Illustration exercises that allow employees to imagine what they might look like when they are older, letters from older individuals to younger people, and real-life case studies, are among the methods that can be utilised to inspire staff to engage with and visualise their future, says Judith Groves, managing director at Like Minds. “It’s trying to get [employees] to think about it in fun ways,” she adds. “It has to be something that connects [employees] with the idea that in the future they are still going to want to do many of the things that they do today, and they need to think about how they’re going to make that happen.”
Interactive calculators and modelling tools can provide employees with a picture of their likely areas of expenditure in retirement, their expected retirement income, and even demonstrate how small adjustments to their current spending habits could impact their retirement outcome. The visuals used around these tools can also help to create an emotional connection, says Karen Bolan, head of engagement at AHC. She points to the ‘Forecast’ function on LV=’s Pension Village website as an example. This function links the idea of a weather forecast and pension outcomes, which the organisation’s employees can use a modelling tool to change factors such as retirement age, contribution rate or investment risk, which can influence the weather accordingly, transitioning from heavy rain to blue skies and sunshine. “Rain and dark skies don’t feel great, and your natural instinct is to want to do something about it,” says Bolan.
Organisations can also use communications to overcome the disconnect between employee expectations and reality. Two of the key challenges around engaging staff to save adequately for retirement are a tendency to underestimate both how long they will live and the impact that inflation will have, says Claire Finn, head of UK defined contribution (DC) investments at BlackRock. Communications that depict the future estimated cost of everyday items, such as a loaf of bread or pint of milk, can help to demonstrate the effect of inflation on post-retirement spending and thus the amount employees will need to save to accommodate this.
Keep the present in mind
While it is important that staff think about the future, putting pension saving in today’s terms can make it feel more relevant to an employee’s current circumstances. For example, informing staff that increasing their contribution rate by an extra 1% will equate to X amount of income can be easier to relate to than focusing on the total sum it will generate in the future, says Julia Turney, head of platform and engagement at Barnett Waddingham.
Promoting the benefits of saving for the future today can also help overcome one of the other key challenges around retirement saving, says BlackRock’s Finn. “[Employees] aren’t that aware of the really strong impact that the compounding of returns can have, which is why saving early and saving for longer is enormously important when it comes to preparing for retirement,” she explains.
Equally, however, the present-day financial pressures facing employees should not be overlooked. Employees may have a raft of competing financial priorities, whether that is paying off student loans or just meeting everyday living costs. By recognising these pressures and offering benefits and education programmes that can support employees’ financial wellbeing, employers can lay the groundwork for good financial habits. Groves says: “It also allows [employers] to start building that dialogue with [employees], building rapport and demonstrating that [they] understand people’s lives, therefore making it easier for [employees] to connect to that over the long term as and when they are ready to start saving.”
Make it personal
Not all pension messages will be relevant to all employees, so segmenting the workforce and tailoring communications can help staff to engage with the information that is most pertinent to them. Personalised nudges and triggers relating to lifestyle changes and organisational events, such as pay reviews, can form part of a targeted approach to engaging staff. “It’s all about making it relevant to the circumstances at the time,” says Turney.
Technology can increase the scope for personalisation. Online tools and platforms, for example, can provide context to employees by allowing them to see information that is specific to them, says Paul Waters, partner and head of Guided Outcomes at Hymans Robertson. Short, personalised videos, which can be created to include employee-specific details in a similar way to benefit statements, can also deliver tailored content that staff can relate to via an engaging medium, adds Like Minds’ Groves.
Once employees are ready to engage with retirement savings, it is important that no barriers stand in their way. Waters says: “If [an organisation] can give [employees] a solution and make it easy for them to act immediately, which is the other thing that technology does, then we find that people will take action and they will save more.”
Develop a wider strategy
Regular, targeted, bitesize messages are likely to be easier for employees to relate to and digest than infrequent communications containing a large amount of information. AHC’s Bolan explains: “Have a communications strategy, [do not] just think about putting out the odd campaign or odd newsletter or website encouragement; think about what [the organisation] is trying to achieve, what [it] wants employees to do, and how [it] wants them to think about their benefits.”
Joanna Bean: Improving financial wellbeing at Samsung
Saving for retirement, or life after work as we call it at Samsung, is an important part of our approach to financial wellbeing and we incorporate this into everyday life and within our varied communications portfolio. It is important to talk to employees at every stage of their work-life journey but also at their life event stages too. We tailor our communications in two ways.
First, in the employee journey we offer communications, one to ones, online and printed material, which we issue before employees join Samsung, on day one and also during their induction at day 30. Then we focus on activities and communications to highlight the importance of saving for their futures thereafter.
Second, in the employees’ life stages and by understanding that not everyone has the same requirements, we offer tailored and segmented communications around essential information that they may need based on age, life events and reviewed communications from our annual pension governance meeting as required. This could be on fund performances or contacting employees on net pay versus salary sacrifice options or even targeted tapered allowance emails; the range of topics is quite large.
At Samsung, we have found that activities can take on many shapes and forms, from traditional posters in the toilets, to text-messaging campaigns, to events in our atrium, for example, during our spooktacular Halloween-themed October Money Month in 2016. We try to incorporate as much as we can with our benefits providers to put on benefit fairs relating to financial wellness.
In line with the offerings in our package, such as free mortgage advice service, our workplace individual savings account (Isa) and employee assistance programme (EAP), we can offer much more than pension information but a whole holistic approach to financial wellness in general. This is so important for our employees so that they can make informed choices about financial matters and have access to information as and when they need it. All of this culminates in some pretty impressive return on investment (ROI): we have over 94% of our employees actively saving for their lives after work, over 70 employees investing in our workplace Isa and over £7.5m of mortgages delivered charge-free for our employees.
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Joanna Bean is head of total reward, UK and Ireland at Samsung
Samsung won the award for best benefits communications, large employer at the Employee Benefits Awards 2017. Read more about why the organisation won.