PENSIONS
“Employers should aim to create a seamless blend of digital and personal support that enables employees to confidently manage their pensions while having someone to turn to when they need guidance”
would prefer to talk to someone when managing their retirement, and only 16% are comfortable engaging with chatbots or artificial intelligence-driven platforms for pension-related queries. For employers, this finding reinforces the need for personalised support. While digital solutions like apps or online portals can provide convenience, they can’t replace the value of tailored, human advice. Employers should ensure that employees have access to financial advisers or pension consultants, particularly during key life stages such as when nearing retirement or making significant investment decisions. Moreover, financial wellbeing initiatives such as retirement planning workshops or one-on-one consultations can help employees feel more confident and informed about their options, reducing their reliance on digital tools alone.
Technology's role in engagement not a solution on its own The survey reveals an encouraging openness to managing pensions digitally, with 49% of respondents indicating they would be happy to retire online to some degree. However, the hesitancy that remains is significant. Most people still want human interaction when it comes to making significant financial decisions and only a small minority are comfortable with automated systems like chatbots. For employers, this doesn’t mean abandoning digital solutions but rather combining them with the personalised support employees are seeking. Digital tools are a great way to give employees instant access to their pension information and allow them to make adjustments as needed. But to fully engage staff and build long-term trust, these tools need to be supported by human expertise. Employers should aim to create a seamless blend of digital and personal support that enables employees to confidently manage their pensions while having someone to turn to when they need guidance. Moreover, employers should address the security concerns associated with digital pensions management. With scamming frequently in the headlines, employees may feel uneasy about managing their pensions online. Offering guidance on how to protect personal data and avoid scams can help alleviate these fears and encourage greater use of digital pension tools. A realistic view of retirement: planning beyond pensions Another key finding is that a growing number of people are becoming more realistic about their retirement prospects. Nearly half (47.8%) of respondents believe they have much less saved than they need, and more than 53% feel they may need to retire later than planned – or not at all. While this paints a grim picture of confidence, it also suggests that people are becoming more aware of the true costs of retirement. For employers, this is an opportunity to shift the focus from simply providing pensions to fostering long-term financial
planning. It’s no longer enough to rely on traditional pension schemes. Employers can help by providing broader financial wellness programmes that include education around investments, savings and retirement planning. This could involve offering financial literacy training or incentivising contributions to savings schemes beyond pensions. What this means for employers The findings of this survey offer employers a roadmap for building trust and confidence in their pension schemes. While the industry has made strides in improving transparency and communication, it’s clear that employees still need more support when it comes to understanding and managing their retirement savings. Here are the key actions for employers: 1. Invest in better communication: move beyond annual statements. Consistent, clear and accessible communication throughout the year can help employees stay engaged and confident. 2. Offer personalised support: technology alone isn’t enough. Providing access to human advisers and offering tailored guidance during critical decision points will help employees feel more supported. 3. Provide financial education: boost employee confidence by offering resources and workshops that help them understand how much they need to save and how pensions fit into their overall financial plan. 4. Embrace a hybrid approach: combine digital tools with personalised advice to offer a seamless experience. Make sure employees have access to the information they need, whether online or in person. 5. Address security concerns: ensure employees are aware of how to protect themselves from scams and offer reassurance that digital pension platforms are safe. By taking these steps, employers can help bridge the gap between trust in pensions and confidence in retirement. Ultimately, it’s about providing the support, education and tools employees need to make informed decisions, helping them feel secure and prepared for their future. n
Confidence in retirement savings is declining
Despite the rise in trust, the survey reveals a worrying trend: fewer employees feel confident they have enough savings for retirement. Confidence levels, which briefly picked up in 2022, have returned to 2021 levels, with only 30.9% of respondents feeling they will meet their retirement needs. Even more concerning, the number of people who believe they have far less than they need has jumped from 44.6% to 47.8%. For employers, this signals a need to ramp up financial education and guidance. Employees may not fully understand how much they need to save or how to calculate what their pensions will provide in retirement. Employers should offer tools and resources that help staff better understand their retirement goals and whether they are on track to meet them. For example, running sessions on retirement savings strategies or using online calculators to project pension income could give employees greater clarity and confidence. Additionally, it’s essential to acknowledge that retirement planning is not just about pensions. Employees may have a mix of savings, investments and property, all contributing to their financial future. Helping them understand how these elements work together can boost overall confidence in their long-term financial security.
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| Professional in Payroll, Pensions and Reward |
Issue 107 | February 2025
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