REWARD
l social norms – that is, that when the people around you (or those who influence you) don’t save, don’t talk about saving or perhaps don’t even consider saving for retirement, this becomes your norm. It feels safe as you’re among friends who are doing the same. ‘Nobody I know does it, so I’m not missing out on anything’ l inertia – our tendency to keep on doing the same thing we always have. The last big obstacle in starting to save is friction – it’s difficult to know where to start, and it’s difficult to remember to transfer the money, so we lean back on inertia and do nothing instead. This is where payroll, and all that brilliant data payroll has, can help Payroll has loads of information at its fingertips which can provide great fodder to nudge people towards saving, starting with key event data. ‘You’ve had a pay rise’ or ‘you’ve paid off your student loan’ are perfect examples of financial events payroll are aware of, which present an opportunity to suggest positive things for your employees to do with their money. Instead, what happens is we process the pay, pop it in someone’s bank account and assume they will overcome the barriers above and just start doing brilliant things with it to make the most of it. Using additional employee information alongside the key event data, you can tailor the communication to the employee, making it personalised and relevant, as well as timely. All these elements increase an individual’s likelihood of engaging with what you’re sharing. If your payroll solution allows, you can then start to signpost to easy solutions for
those individuals. Here are some examples of notifications which could automatically generate. ‘You’ve paid off your student loan! Now might be a good time for you to start saving. Set up automated payroll-based savings and the money will be directed to your savings account via payroll each pay day, building you a nice pot in the background’, or ‘congratulations on your pay rise! Consider putting the additional money into your pension. Doing this means you keep 100% of it, and no tax will be deducted.’ “There are many behaviours that stop us from doing what we know is in our best interests, especially when it comes to money” Review the tools you have in your payroll solution that could help. For example, the ability for employees to easily set up automated payroll-based savings. This is one of the best methods to start building a savings habit, especially for those not used to saving money each month. Can your payroll solution enable you to do this? This could be hugely powerful when combined with payroll data. Review your payroll policies. If you, like many, have a three-month postponement period before automatically enrolling your employees into their workplace pension then question why. 67% of respondents to our research said they wanted to be able to start making contributions immediately, as those extra
three months could make a big difference over the course of someone’s lifetime of contributions. Think about the way you present that rich payroll data too. Make it clearer for employees to see the contributions they make, plus those you (as their employer), make into their pension fund each pay day. Pick a pensions partner which enables them to easily see their balance grow, or better still, a payroll partner that can include pensions dashboards so they can see all their pension pots in one place. For the majority, pension contributions feel like chucking money into the abyss and very few people feel good about their pension contributions when they really, really should. Using your data in this way can make a massive difference to your workforce and you’ll be contributing to the UK’s financial well-being goals too, doing your bit for a better society. Lastly, the most amazing thing about all of this is that you don’t need to heavily invest to achieve it. You have this data already. It’s just another example of a way that payroll teams can make a big strategic difference. So, I beg you – please don’t leave the data sitting in systems untouched – use it now to make a difference to people! n Resources: Full behavioural insights report: https://ow.ly/t5J650Q0Hc0 The Money and Pension Service UK strategy for financial well-being: https://ow.ly/EVlE50Q0Heg Find out more about payroll-based financial resilience tools: https:// ow.ly/EQhV50Q3qbN.
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| Professional in Payroll, Pensions and Reward |
Issue 95 | November 2023
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