A pension is one of the most important employee benefits you can offer, especially if you match contributions. By paying into their savings pot, you can help your staff build a healthy retirement fund.

However, to get the most out of their pensions, your employees need to be proactive about managing their savings, reviewing contributions, and exploring their investment choices.

Unfortunately, this may be difficult as research shows there is a distinct pension knowledge gap.

An estimated 22.5 million UK adults do not understand pensions well enough to make retirement decisions

It’s easy for your employees to forget about their pensions after the initial onboarding. If they’re still a long way off retirement, they might not monitor how their pot is growing or consider whether they’re saving enough.

Even if they are concerned about their ability to save for retirement, many employees don’t have the confidence to take control of their pensions.

Research from the Money and Pensions Service surveyed 12,000 people and extrapolated the data to estimate the pension knowledge gap. The results suggested that 10.7 million UK adults are too confused or busy to think about their pensions.

The same survey suggests an estimated 22.5 million don’t understand enough about pensions to make decisions about their retirement. Worryingly, around half of those surveyed also said they didn’t have a plan for their finances in retirement.

This means that, even though you are contributing to their pensions, your employees may not be making the most of this retirement savings vehicle. This could lead to problems, including:

• Not contributing enough to achieve their desired lifestyle in retirement
• Low investment growth on their savings
• Difficulty understanding how and when they can access their pensions.

Ultimately, this might mean that your employees fall short of their dream retirement and struggle to maintain their quality of life once they stop working.

Fortunately, by providing financial advice as a workplace benefit, you could help your employees close the pension knowledge gap and gain more control over their retirement planning.

4 ways workplace financial advice can improve retirement outcomes for your employees

1. Taking advantage of tools on the Zurich app

The Zurich International Online (ZIO) app includes many financial wellbeing tools that your employees could take advantage of. These include:

• Retirement planning projections
• Risk profile questionnaires
• Educational content about managing finances.

Using these tools is a good starting point for employees who want to take a more active interest in their finances and learn more about pensions and retirement.

2. Setting goals and savings targets

Your employees may not have a clear idea of how much they need to save for retirement, meaning they can’t plan effectively.

People often underestimate how much they are likely to spend in retirement, especially if they require later-life care.

A financial adviser can ask your employees about their goals for later life, including travel plans and their general lifestyle. Using this information, they can then determine how much your employees are likely to spend each year in retirement, accounting for factors including inflation.

Considering average life expectancies, they can then land on a savings target.

A financial adviser will then review current contributions and forecast whether your employees are likely to meet this retirement savings goal. If it’s likely that they will face a shortfall in later life, they will know ahead of time and could increase the amount they save each month.

3. Understanding their investment options

Once they have a clear idea of how much they need to save to achieve their dream retirement, your employees might adjust their contributions. But it’s equally important to consider their investment options and whether they’re generating enough growth on their pension savings.

A financial adviser can explain the various options to your employees and help them develop a strategy that aligns with their long-term goals and attitude to risk.

4. Planning their retirement income

As your employees approach retirement, they will need to consider how they will use their pension and other savings to generate a sustainable income.

A financial adviser can explain how and when they can access their savings, so they can make informed decisions. Professional advice also helps employees draw on their savings tax-efficiently and budget carefully to reduce the risk of spending them too quickly.

The right retirement planning support gives your employees peace of mind

The benefits described above mean that your employees will gain a greater understanding of their pensions and how to ensure they are saving enough to achieve their dream retirement. They’ll also learn how to withdraw their savings sustainably, so they are more likely to last throughout retirement.

Ultimately, this gives them peace of mind that they will be financially secure in later life, reducing short-term stress and improving their overall wellbeing.

Get in touch

To learn more about how we could support your team, email grouprisk@rfsl.co.uk today. Alternatively, call 01534 502000 in Jersey or 01481 747940 in Guernsey to discuss how we could support your business.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of tax legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 50. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change.

Rossborough Financial Services Limited is regulated by the Jersey Financial Services Commission under the Financial Services (Jersey) Law 1998 and licensed by the Guernsey Financial Services Commission.