How can employers engage their staff with their pension? And what is the impact of an actively engaged workforce? Mark Rowlands, head of DC services at Mercer, investigates
Having your employees engaged with their pension savings is widely heralded as the ‘ideal’ in this new world of freedom and choice. But employers must be clear on what their objectives are.
For example, you might want your employees to save more because they’re not saving enough, or you might want them to value the pension benefit more because it’s your highest spend after salary.
So you have to understand what exactly you’re trying to engage your employees with – and what behaviour you want that engagement to drive.
From there, the next issue is around the communication. Existing in such a digital world, every day, every employee is swamped with huge amounts of information, so how can you make your message stand out?
Assuming the message resonates, how do you drive change? New research evidences the drop-off between intentions and actions: so even if your communications creates employees’ good intentions, there is a gap between the awareness being raised and appropriate actions being taken.
Mercer has been working on behavioural research with global experts such as Shlomo Benartzi, to ask how corporates can crack this gap and help their employees bridge it.
It all comes down to timing: employers must communicate in a personalised and segmented way, but time their call to action based on each different employee and their life stages.
We’re building a toolkit for employers including a series of personalised video benefits statements, which last less than 50 seconds and will talk to the employee personally about how much they and their employer have paid in over the past 12 months, what their fund is, and whether they are on track.
In the video, we also close the gap between good intention and action, and give employees their active options: whether that is using a modelling tool, registering for a webinar, attending a one-to-one session with the scheme adviser and so on. Even better, the workforce can be segmented, so different cohorts receive appropriate calls to action for their situation.
In this way, employers can engage not just their retirees but their whole workforce. The challenge is ensuring that with younger employees the information is timely: if you communicate at the wrong time, then it’s no use to them.
So, it must be relevant, timely and personal, and with a relevant call to action in that communication.
We’re encouraging employers to tell their employees not just to think of their pension but of their total wealth – share plan, ISAs and so on. If this are presented in a visual way, in one place, then they will understand their total wealth and know if they’re on track. The real message for people is bringing their savings into the holistic reward environment and promoting the understanding of their total wealth.
If you, as an employer, manage to connect your workforce successfully with their pensions and savings, the impact is huge.
There is a lot of evidence to show that financial engagement will lead to a more productive workforce – it removes a major source of stress and worry because employees are not as concerned about their finances.
Financial wellness is accelerating the whole time, and progressive companies are moving down this path. Many are now taking the pension outside of its own bubble and put it alongside their HR strategy, to get a joined-up view of their total benefits and how they can most effectively use those for the benefits of their people.
The imperative is from both the paternal perspective and the corporate perspective. The lack of retirement date is a concern for companies – they don’t want employees who haven’t saved enough to retire, so are still working but are no longer either productive or motivated.
Holding on to talent that can afford to retire is the other side of this coin and requires a thoughtful approach to benefit provision that retains and motivates employees.
Really importantly, we don’t just have to engage people in the right way, we also have to give them all the information and make it easy for them to take an action. You have to put the very best of digital with the opportunity to have face-to-face discussion in the workplace.
Digital communications can make engagement personalised and timely, but then employers can bridge that intention/action gap by encouraging seminars or face-to-face guidance.
Driving behavioural change in the workforce is not easy – but done effectively it leads to a less stressed, more productive workforce.