Has there ever been more noise about retirement and pensions? To name just some of the recent headline grabbing issues:
Many of us in the financial wellbeing community firmly believe that the very best employers have grasped the following fact: most employees are overwhelmed by the level of complexity around their retirement choices, almost to the point of paralysis.
So here are my top tips on delivering an effective employee pre-retirement programme:
Have a pension communication strategy that engenders employee retirement interest from the minute they join you. It is probably the simplest and most obvious statement to make – get your staff interested early, and they will have a better experience and a greater chance of enjoying a good outcome.
This may also seem blindingly obvious. There is a famous Harvard experiment that shows those who make a targeted plan, and have something to aim at, are more likely to get somewhere successfully than those who do not. So we need to ensure employees have access to tools that help them realise what is needed in order to retire comfortably, and that they use them. Many pension scheme websites have these very tools. However, sadly, with average registration take-up at around 10%, we are aware that many employees don’t use them.
There is going to be an explosion in the financial technology sector in the form of robo-advice. These online advisory tools will inevitably look at finances holistically, but a key feature will be employees’ retirement journeys, and this has to be good news. My sense is that the more intuitive the technology that reaches out towards employees, the better the levels of engagement will be.
There is less and less agreement about ‘when’. The new pension freedoms have given greater access and control, and the result is that people are taking their benefits earlier. They may not be fully retiring, and this is backed up by the doubling of those who are working, earning and also drawing from some of their pension pots. In short, phased/semi-retirement is the new rock and roll. There is a need for employers to understand these changing times and be aware that the retirement age is no longer 65. The design of material and content to educate employees may need to target those in their 50s now, which never used to be the case.
Above everything else, employees seem to take on board the most when they attend a well-planned and delivered pre-retirement event. In my opinion, these sessions need to be the following:
Ensure that each session invites constructive feedback so that sessions can be evaluated, reviewed, improved and updated in line with industry, legislative and economic changes.
Employers getting these fundamentals right are likely to be able to claim that they have an effective pre-retirement programme. However, they will be well advised to reach out for some expert guidance on the subject as these sands, they are always a-shifting!
This article was first published with REBA on 16 May 2017.