How to increase employee pension engagement in 4 simple steps

April 2022
Share this article:

Everyone benefits when employees are engaged and interested in their workplace pension schemes. 

Engaged scheme members tend to be more motivated, less likely to suffer financial stress, and, of course, more likely to be able to afford to retire at the time that’s right for them.
The pension engagement problem

To support the financial wellbeing of their employees, many employers want their team to actively engage with their pension. And many employers look to providers and consultants for help with education and guidance services.

While this can help increase the level of understanding about workplace pension schemes, it doesn’t necessarily encourage employees to proactively engage with their pensions.

For example, we typically see low engagement for younger members. For many young workers because they are at the start of their pension journey, retirement can seem like a distant dream. So pension savings aren’t something they feel they need to concern themselves with.

In fact, employees only tend to truly engage with their workplace pension and retirement funds as they approach retirement.
Earlier engagement is vital as it can help people influence their income in retirement, sometimes significantly.
Young employees who commit to making early pension contributions benefit from full use of compound interest. This can mean that making small savings early can be more important than larger savings later.

4 simple steps to encourage employee pension engagement

There are steps you can take to encourage employees to think about their retirement savings. 

1. Empower employees with financial education
The key to truly engaging employees with their pension is advice.

While auto-enrolment has helped to ensure that people are contributing to pensions, advice is needed to ensure that they understand what level of income their pension savings could generate in retirement. 

Providing education and expert support in the workplace will help employees have a better understanding of whether they should increase their contribution levels and how that will affect their retirement prospects.

2. Offer access to supporting tools
For many employees, financial advice costs too much. Support employees with free and continued pension advice. This includes ensuring the underlying investment is appropriately risk-aligned. 

We can help significantly enhance engagement with employee pension schemes. 

Our end-to-end digital service provides greater flexibility for employees to interact and receive advice on their pension. And because this valuable proposition is digital, we can deliver at a substantially lower price than clients would typically pay for regulated advice. 

3. Run financial guidance sessions
We support you and your employees with regular webinars and guides. Our regular member sessions include sections for over-55s, and we always decipher jargon and clearly explain the available options and key considerations. 

Easy access to advice, guidance, and tools that bring the numbers to life gives members peace of mind about their finances in later life.

Our consultants also deliver independent and free guidance solutions for employees, making it easy to gain whatever level of support an employee might need, no matter where they are in their pension funding journey.

4. Keep it simple
Finally, telling employees a few straight facts can help get them to engage more fully with their pension. Remind them that:

  • You put money into their pots too, so it’s not all down to them. If they opt out, they won’t benefit from this.
  • With tax relief at source, pension contributions receive a 20% boost from the government. And higher-rate taxpayers can claim more through their tax return.
  • It’s their money – when it goes in, and when it comes out. Currently, from age 55, they can take 25% in cash, tax-free. Accessing pension benefits early may affect the level of retirement income and eligibility for certain means tested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.

Turn to LEBC for support

More employers are turning to specialist financial wellbeing and retirement service providers to help their employees engage with their pensions throughout their career. 

Taking an active approach, and supporting employees with the help of reputable firms, will make the whole process far more robust, as well as helping them to make the most of their life savings.

As workplace pension saving becomes the norm, the need for access to quality financial advice has grown. Partnering with LEBC can add real value to your business and workforce.

In summary, by providing Workplace Advice from LEBC you can:

  • Increase employee understanding of your pension scheme and benefit packages
  • Encourage your employees to engage with you as an employer
  • Create a more motivated workforce
  • Ease the workload for HR and payroll departments.

Meanwhile, your employees will:

  • Receive a personalised service bespoke to them that advises on:     
  • Pension contributions     
  • Investment risks     
  • Tax implications
  • Understand how to make the most of allowances and avoid unnecessary tax bills
  • Have access to an annual review that adapts to their changing circumstances
  • Receive specialist advice as they approach retirement age.

Get in touch
According to research from the International Longevity Centre, scheme members who take advice are, on average, £47,706 better off than those who don’t. This figure underlines the difference that access to financial advice can make to your employees and their financial wellbeing.

To find out more about how we can help you add real value to your business and encourage more employee engagement with your workplace pension scheme, get in touch. Email or call us on 0800 055 6585.

The information contained in this article is based on the opinion of LEBC Group Ltd and does not constitute financial advice or a recommendation to any investment or retirement strategy. You should seek independent financial advice before embarking on any course of action.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken. Workplace pensions are regulated by The Pension Regulator.

The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.

Share this article:
Back to News & Views