5 ways your boss can help boost your pension

Bosses can help increase their employees’ pensions with a few simple nudges, according to new analysis, as figures showed 14.6 million people are under-saving for retirement.

More than four in 10 (43%) working age people aren’t saving enough for their golden years, the Department for Work and Pensions found in a report to coincide with the launch of its new Pension Commission, aimed at improving the UK’s retirement savings.

At the same time the impact of rising costs has meant almost half (45%) of workers believe they will never be able to afford to retire – up from two fifths (39%) twelve months ago, and a third (33%) in 2023 – separate research by employee financial wellbeing firm Wealth at Work has found.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Staff also report a general lack of pension understanding. A fifth (21%) of employees are unaware their pension is invested and 39% don’t know what their pension is invested in, according to the Wealth at Work survey.

Yet the research also found 41% of employees would increase their contributions if they knew their pension was invested in funds that aligned with their values and beliefs.

Jonathan Watts-Lay, director, Wealth at Work, said: “These findings should prompt employers to consider how employees are being supported to tackle money issues head on, build financial resilience and achieve more positive outcomes for the future.

Ways to boost workplace pension saving

A small increase in pension savings can make a significant difference to your final pot. For example, someone in their 20s, saving just 1% more each year into a workplace pension can boost future savings by 25% if their employers were to match this, according to Wealth at Work..

We look at the 2% trick – how tiny pension top ups could add thousands to your retirement – in a separate article.

But often the issue is how to get people engaged enough with their pension to contribute even small amounts more. Making more information and guidance available in the workplace using a few simple tricks that won’t cost the Earth is one surefire way responsible bosses can help.

1. Empower your staff with engaging education

Set up interactive financial education workshops about pension options and retirement income choices. This is far more engaging than pension information provided via a website or leaflet.

2. Offer tailored support

To make it meaningful, financial education should be tailored to each demographic in the workplace by career stage.

• Earlier on in an employee’s career it should cover how pension schemes work, employer and employee contribution levels, pension tax relief, what funds they can select from, as well as how they can switch the funds their pension is invested in.
• Mid-career employees will need to understand if their pensions and other retirement savings are on target, as well as how income may be generated in retirement and ensure investments are being managed in line with this.
• At retirement, people will need to understand how to generate an income from their pensions and other savings, as well as how to seek further help including investment advice and pension consolidation services to help people manage their money in retirement in the best way possible.

3. Run financial guidance sessions

One-to-one financial guidance or coaching sessions could be particularly useful for those who need a deeper level of knowledge around their pension options, particularly for those at retirement.

4. Provide access to investment advice

This is particularly useful for those at the point of retirement who want to understand their personal financial situation and may have more complex questions about their pensions and retirement income.

5. Bring in a pension provider

Many employers and pension trustees work with financial wellbeing, retirement and workplace savings firms to help staff engage with their pensions and savings throughout their career. It’s best to go with a workplace specialist and to check adviser qualifications, the regulatory record of the firm, compliance process and pricing structure.