How to help different demographics with their Pension needs

When it comes to savings, it’s fair to say many of your employees will be signing from a different hymn sheet.

From soulfully signing ‘save for a rainy day’ to belting out ‘chase your passion and not your Pension’ at the top of your voice, retirement means something different to all of us. If you have 20 people in your office, that ultimately gives you 20 different Pension outcomes.

For certain colleagues, living in the moment is more of a priority than saving for the future. For others, consistently topping up their Pension pot is a matter of urgency. With employers playing host to a number of different demographics, opinions on savings will always differ. But how can you ensure you’re providing all of the education these different employee groups need?

When it comes to employee benefits, a Pension is by far the most significant element of any employee value proposition.

The spend by both employer and employees overshadows that of other options within your benefits portal. In fact, across out bank of clients on the Zest test portal, the employer spend is roughly five times more than that of the next most expensive benefit.

The challenge is what a good retirement looks like, and how you can help promote your Pension to a diverse workforce. When it comes to age and generational difference, Generation Z is the first to have auto enrolment normalised, whereas someone who was born years before that may not have automatically been contributing to their Pension scheme when it wasn’t a requirement, leaving a large gap in their savings. They may also have a number of different employer Pensions from different employers and will be wondering what they can do to maximise their pot, looking towards you as the employer to help them understand those options.

It’s not just the age demographic to consider, you also have employees of different genders and employees earning different salaries.

During our recent Pension’s webinar, James Bolton, Managing Director and one of the co-founders of EBCam Employee Benefits, told us how employers can help different generations with very, very different needs.

‘There will always be different generations with significantly different needs, because they will always be in a different place in their retirement planning.

‘We’ll soon be coming to the peak of a defined benefit category of retirees. The older generations today will be some of the last getting those defined benefit schemes. There’s naturally been a gap from that generation to the auto enrolment generation.

There are significant differences in what you need to do to make sure your employees are educated about their retirement needs, and to help them understand the different paths there are for retirement.

Key issues will be engaging, communicating and educating these different demographics, pointing them to the places they need to go to get that all-important help, guidance and advice.

The first thing you can do is to provide tailored workshops to different generations. Whether you’re beginning your working career, in the middle of your working life or coming close to retirement, employers can look to tailor presentations and workshops to try and specifically drill down into the important aspects of Pension savings.

Some employers can offer one-to-one meetings or video conferences, making it even easier to interact with your different demographics, especially if they are scattered across different office locations or working from home / hybrid. Perhaps you host meetings with a particular team. If so, schedule an extra 20 minutes to answer any questions around Pensions they may have.

I’ve seen employers dedicate a number of days towards one-to-one meetings where their members/employees can access 20-minute sessions to talk about any queries or concerns they may have.

That can be really helpful for employees and provides a totally tailored experience dependant on where they are on their individual journeys. There are also tax efficient ways of employees getting specific guidance and advice.

You’ll find a number of companies that offer this as independent advice, but the UK Pension Advice Allowance enables people to withdraw £500 of their Pension pot to get what is effectively tax-free advice in relation to their Pension planning, and then through salary sacrifice or via payment from you as the employer, employees can also receive an extra £500 for retirement guidance and advice.

Ultimately, there are different solutions that can be put in place depending on the employer’s budget and the employer’s appetite to offer particular solutions. Don’t forget, you can also utilise the money advice service and Pension Wise, where those getting close to retirement (aged over 50) can get a free appointment to discuss their retirement options.

It’s important that employers are aware of and are promoting everything that is available. It’s also important that they use the workplace Pension provider,  making sure they’re engaging with them and using all of the tools they facilitate. Quite often, most workplace Pension providers may offer specific presentations, they may offer their own workshops, they will have tools and calculators and all kinds of educational services that can be very useful to your employees.

And of course, on the Zest benefit’s platform you can promote all of these tools and provide targeted communications through your employee engagement platform to reach out to specific groups.’

‘There will be employees earning minimum wage and employees at the top of the wage cap. Naturally, some employees will have a significant part of their retirement fund made up by the State Pension.

This is where a scheme that is a bit more generous than the standard minimum contributions from employers would be a good thing. That would help, and employers can, if desired, have a voluntary scheme where they pay all the contributions that are required for auto enrolment. The counter-argument would be, if the employer is doing everything, are the employees engaging with their scheme.

At the bottom level of the salary difference, it can be difficult to help employees understand the importance of Pensions, as they will have other, more immediate needs, with salary sacrifice also not coming into play below a certain earning cap. The Government are pushing for a lower age for entrance to auto enrolment and removing the lower earnings limit, which may help people save from a younger age.

Those with a bigger income will have a better ability to save. Here employers should be educating employees about the different ways to improve their savings (contributing to an ISA in which allows for up to £20,000 each year to be saved in a tax efficient environment).

Zest can also help facilitate the fact that once someone has used up their annual allowance, it can help filter it across into a workplace ISA.

The advice at each end will always be different, but only at the lower end will it be an affordability issue.’

According to Matthew Gregson of Howden Employee Benefits, things are already significantly shifting in the right direction.

‘With demographics and social trends, we’re fundamentally different than we were 20,30 or 40 years ago. Suddenly, we’re judging things by where current retirees are at. For those around 65, there’s going to be greater disparity, but with an older demographic today we now see a greater parity in what is being contributed towards Pensions.

We still see career breaks and other responsibilities that are often taken on by women over men. I think the gap will persist, but it needs to be continuously addressed.

Employers can’t pay in different amounts for people doing the same jobs. The gap can’t be closed by money, but so much can be done to support and educate. Employers can help female colleagues to understand their future pathways and the potential to contribute more.

When there are periods of absence, particularly unpaid absence (a full year of maternity leave for example), perhaps consider paying a full year of Pension contributions, and not just limiting it to periods of paid leave.

It won’t help make significant inroads, but it will help bridge the gap in a legitimate way without discriminating against male and female colleagues. According to the statistics, women are living longer than men, so female colleagues may need their money to go further as well. It’s now about how big their pot is but educating them on how many years they are likely to need that pot’

As an award-winning employee benefits provider, our platform is designed to help enrol employees into a workplace Pension. Allowing them to access their retirement scheme and their flexible benefits all within the same benefits portal, employees have all the information they need at their fingertips, with options to increase and decrease contribution levels with a simple click of a mouse.

And remember, our handy mobile app means Pension contributions can be amended on the go, with the impact to an employee’s salary shown live when choosing a new contribution rate.

As the Technology of Benefits, we’re championing a new era of employee engagement, going beyond the one-size-fits-all approach to constantly improve your company benefits scheme.

Wondering how we can implement your benefits portal in a matter of weeks? Book a demo with our team today.