Employees missing out on contributions as they fail to engage with their pension
Almost all (97%) of UK companies have said that they are experiencing ‘significant pension inertia’ within their workforce, carried by LifeSight, Willis Towers Watson’s UK DC Master Trust.
The research showed that many employees are only saving auto-enrolment minimums into their pensions and therefore missing out on potential employer-matched contributions.
For lots of employees, particularly younger staff, a lack of pensions engagement is at least in part due to other saving priorities. Common barriers included:
- Saving money for a house or holiday
- Complexity and lack of understanding of the pension product
Over half (57%) of those surveyed admitted that despite these barriers, they have not personalised their pension communications to individuals – while over a third (37%) said that they did not currently have any plans to play a greater role in the long-term savings of their employees.
Commenting on the findings, David Bird, head of proposition development at LifeSight said: “This is a worrying, but unsurprising finding. Employees focusing on short-term savings is a common challenge. Personalised pension communication could be an important way of addressing inertia in pension savings.
“With the recent increase in the State retirement age to 68 for many, employees will need to take a much more proactive approach to saving if they want to retire well or earlier. Providing engaging online tools which make member’s saving decisions more relatable can help nudge them into action, for example by helping them understand how it impacts the age at which they can retire.”
Richard Veal, line of business leader (UK) reward, talent, communication and change management at Towers Watson, added: “In 2017, there is no reason why the pensions industry should be lagging behind with outdated communication methods, such as paper statements and brochures. By analysing behavioural patterns underpinning saving attitudes and strategies, using modern technology and making pensions more relatable, the industry can become better enablers of pension saving decisions.
“With their significant access to and influence over the UK’s workforce, employers can also play a crucial role in driving engagement and ultimately help guide their employees to financial security in retirement. Good communication with employees will be critical in overcoming the UK’s current pension paralysis.”