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Concern over low engagement in workplace pensions

Young business woman leading a presentation at work

If people don't pay attention to their pension savings, they could end up under-saving for retirement. Can employers do more to help their employees plan for their later life?

One in six UK employees have never checked their workplace pension, and only a quarter have checked it in the past year, according to new research by My Pension Expert.

Meanwhile, four in ten employees contribute between only 8% (the minimum) and 10% of their monthly salary into their workplace pension (when combining theirs and their employer's contributions). And one in eight don't actually know whether they have a workplace pension or how much they contribute to it.

Yet despite this lack of engagement, most (59%) UK adults with a workplace pension say they will rely on it to fund their retirement.

'Not just a box to tick'

Auto-enrolment, introduced in 2012, requires UK employers to set up a workplace pension, enrol all eligible employees, and contribute to their pension pots.

This streamlines the process of saving for retirement and has led to more than 10 million people being enrolled in a workplace pension.

However, while auto-enrolment has been rightly hailed as a 'game-changer' for ensuring employees save into a pension, more needs to be done to help people to better engage with their workplace pension, and retirement planning more generally, said Lily Megson, policy director at My Pension Expert.

"Workplace pensions are not just a box to tick -- otherwise people could enter later life with a nasty surprise when assessing how financially prepared they are for retirement."

Employee financial wellbeing

In the research, three in five respondents said they want to see their employer do more to help them understand and engage with their workplace pension.

Although more employers now understand that financial wellbeing is more than just paying employees and providing a few benefits, it is still the least common area included in HR wellbeing strategies, according to HR body the CIPD.

A financial wellbeing strategy can cover pension saving and more -- giving workers the confidence and skills to manage their household income, savings and debts more effectively, as well as plan and save for their retirement.

Improving retirement outcomes

Financial wellbeing is gaining recognition among businesses and HR teams for its impact on employee welfare, resilience, retention, talent acquisition and cost reduction, said Lily Megson from My Pension Expert.

"As the cost-of-living crisis persists and the state pension age rises, it's crucial for HR professionals to be equipped to offer the right support.

"Enhancing educational resources and fostering open dialogues in the workplace about retirement planning are important steps. However, the real value emerges when employers facilitate access to independent financial advisers. Whether funding, discounting or providing a list of potential advisers, this support helps employees navigate complex financial matters, offering personalised assistance crucial for improving retirement outcomes."

Posted by Fidelius on February 19th 2024

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