Communicating the benefits

The advent of auto-enrolment provided a golden opportunity for employers to communicate with employees about their total reward package or other financial aspects of working life, which surveys show employees are increasingly keen to receive.

Recent research suggests that over half UK companies do not provide financial education to their staff, only 38% of whom know how to manage money, and just 11% understand their pensions. Providing financial education, particularly on pensions, can also help staff engagement.

According to People Management, most employees would welcome pension information and guidance, with most support for communication about investment performance (32% of employees recently surveyed), pension charges (31%), and what to do at state retirement age (29%). Contrary to popular belief, younger employees are more likely to welcome such support than middle-aged or older workers – twice the proportion of 18-24 year olds would like information and guidance on pension charges than those over 55.

Communications about auto-enrolment might also point out what people can expect from the basic State Pension (less than £8,000 a year from 2016) and ask whether this will be sufficient for their planned retirement. As with all good communication, these must be open, honest and timely.

Employers will have to provide written information to each individual employee but may also wish to consider newsletters, booklets, or their digital equivalents to provide general background information.

Financial education

Presentations and one-to-one discussions could be supplemented by regular briefings by a team supervisor or manager, and employers can also pay for one-to-one consultations with independent pension advisors without it being taxed as a perk, providing it is available to all employees, is not general financial or tax advice, and costs no more than £150 per employee – particularly useful for SMEs.