As most HR professionals will be aware, employees are becoming increasing concerned about their future financial security, especially when it comes to their pensions. Whilst the Government’s pensions auto-enrolment initiative which began on 1st October should get more people saving for their retirement, employers need to ensure that employees understand what is happening and why. I cannot emphasise enough the importance of effective communication in tackling this ‘pension pessimism’ that is pervading the workforce.
Employees want retirement security
The fact that people are concerned about their pensions and retirement is highlighted in our latest Global Workforce Study. The survey found that over half (52%) of British employees are worried about their future financial state amidst concerns over their ability to retire with a sufficient income. According to our study, six out of 10 (60%) British workers claim that retirement security has become a higher priority for them over the past three years, rising to over three-quarters (76%) for workers aged over 40.
Many will retire later or not at all
The research underlines that UK workers are beginning to question the feasibility of their expected retirement age with nearly half (47%) now anticipating they will retire later than they previously thought, and less than one-in-ten (9%) believing they will retire earlier than expected. Levels of pessimism were higher in the UK than the US at 42%, and France and Germany at just 36% and 38% respectively. Furthermore, just 38% are confident they will have sufficient financial resources to live comfortably for 15 years into their retirement and only a quarter (25%) for 25 years. Other reports published recently show that some workers may never retire at all – they will have to keep working as they do not have sufficient savings (http://www.express.co.uk/posts/view/353810/Millions-must-work-forever).
So what can businesses do to help?
Effective communication with employees is vital if they are to feel confident about their retirement. It is very important for businesses that their employees grasp the value of pensions as part of the total reward package, and appreciate that auto-enrolment means more companies will be investing in retirement provisions for their employees. Many companies are going above and beyond the Government requirements for employer contributions, but if they are not communicating this properly then employees are unlikely to be aware of, or understand, the extra value they are receiving and why they are contributing from their own salaries.
Towers Watson has the following advice to help HR professionals communicate the forthcoming changes effectively in order to avoid any subsequent employee engagement and retention issues:
1. Communicating pensions and Total Rewards: Clearly explain to employees the value of all financial and non-financial benefits you are offering. In addition to salary, bonus, pension and other benefits, this should also address aspects like career advancement, training and development to provide a full picture of the opportunities on offer.
2. Being ready for auto-enrolment kick-off: The rules are complex; ensure employees know the impact on their pay and their options as well as deadlines for taking action.
3. Thinking outside the tick-box: Pension policy announcements do not grab employees’ attention; organisations need to develop innovative ways to capture the imagination of their diverse workforce other than email and intranet postings – for example, external microsites, quizzes and online games encourage more people to engage actively with the topic and give you measurable results.
4. Raising awareness on latest developments: Make a point of regularly telling your employees about pension legislation, so that employees can ‘join the dots’ between Government campaigns and what your organisation is doing about auto-enrolment.
5. Seeking employee feedback: Pursuing two-way communication and taking on board employees’ views will reassure employees that their opinions count, boost awareness and understanding of pensions and benefits, and appreciation of their employment deal. It also allows you to adjust your tactics to fit activity that’s shown to work with the smooth running of the business.
For more information or to download a copy of Towers Watson’s Global Workforce Study, please visit http://www.towerswatson.com/united-kingdom/research/7556.
