As Pensions Awareness Week 2023 draws to a close, we’re reminded that 59% of adults contributing to a workplace DC pension have low, or very low pension engagement. Now is clearly the time for employers to be developing plans on how to better support staff with their retirement planning.
Low engagement isn’t good news for pension providers, individuals, nor the companies that employ them.
The benefits of high levels of pension engagement
Leading the charge in boosting pension awareness is Moneyhub partner Standard Life. Standard Life’s Retirement Voice 2022 found that people who dedicate time to pension planning, are reaping benefits to their wider financial wellbeing:
They are almost three times more likely to feel more positive about their financial situation
More likely to feel confident in making financial decisions
More likely to enjoy retirement
But, despite these benefits, and the cost of living crisis encouraging more people to pay closer attention to their finances, their research shows that “when it comes to retirement planning, the vast majority of people (72%) are still doing little, if anything.”
So, what’s stopping people?
Within the report, Standard Life put these low levels of engagement down to the advice and guidance gap, lack of education and support, and feelings of overwhelm when people do come across guidance or information on their pensions.
People who are not engaging with their pensions tend to have poorer financial wellbeing overall, with 66% worrying they are not saving enough for when they’re older and 47% feeling less confident in their ability to make good financial decisions.
For individuals, this leads to feelings of stress and anxiety, which in turn can lead to reduced productivity and performance for the companies that employ them.
Responsible employers must take action
While employers are beginning to recognise that financial wellbeing goes beyond paying salaries, it is still the least common area included in HR wellbeing strategies. Yet, as Gail Izat, Workplace Managing Director at Standard Life states, “employers are perfectly positioned to provide the information and guidance people need, because they can incorporate it into their workplace pension offering.”
In the midst of the cost of living crisis and the widening UK savings gap, it’s more important than ever that employers demonstrate a commitment to the financial wellbeing of their staff.
The good news is, with Open Finance technology like ours, it’s never been easier.
Unlocking value for pension providers and employers with Open Finance
Pension engagement is one part of the puzzle. If people are struggling with debt, managing their day-to-day finances or even focused on saving money for something like their first home, paying attention to or contributing more to their pension will be low on their list of priorities. For people to have healthy finances in retirement, they must adopt healthy financial habits through their working lives.
Standard Life has understood this and incorporated Money Mindset, built on our Open Finance capabilities, into their workplace offering.
Setting pension providers, and in turn employers, apart
Incorporating an Open Finance proposition like Money Mindset truly sets Standard Life’s offering apart.
Money Mindset offers users a complete picture of their entire financial world (current accounts, savings, properties, investments, pensions and more) alongside forecasting tools and even a financial education hub.
Providers who adopt these solutions will be the ones who see higher levels of engagement from employers, really differentiating their offering in a crowded market. They can work with clients to augment Employer Value Propositions and bring a host of benefits to their end-users.
It’s win-win-win
Fostering a more financially literate and resilient workforce benefits all parties mentioned in this blog post. Individuals gain confidence in managing daily spending and unexpected costs, get greater control and understanding of where their money is coming and going out, and get on track for a secure and sustainable financial future into retirement.
Employers reap the rewards of higher productivity and performance, reduced absenteeism and employee stress or burnout and become more attractive to, and better at retaining, top talent.
And of course, pension providers benefit from primacy among workplace clients and members, higher level of engagement and increased opportunities to boost AUM through consolidation or higher contributions. It’s win-win-win!
Would you like to find out more about how Open Finance could benefit your business? Talk to one of our guides →