PR – Employee Benefits

Darren Laverty of Secondsight comments on how employers should ensure they get value for money from their pension when auto-enrolment comes in.

Employees must be made aware that auto-enrolment is a positive approach that will make a big difference for their retirement. The success of auto-enrolment depends on large numbers of people staying in schemes, which will happen only if people see it as a benefit, says Standard Life’s Jenkins.

“If the headlines we create are positive, and saving for retirement with ‘free money’ from employers and the government is seen as a sensible thing to do, it will succeed,” he says. “If it is seen as another tax, it will fail.
“Also, although people will be enrolled without the need for action, there are decisions to be made beyond that, such as contribution levels and investment choices, which should be reviewed from time to time. We need to educate people to a level that they feel confident in looking at such things.”

There is growing interest in financial education in the workplace, with auto-enrolment at the heart of the communication strategy, says Larraine Solomon, principal at Mercer. “Some employers have already embraced auto-enrolment and have a clear plan, but many are only just beginning to think about their communications,” she says. “Many will use this as an opportunity to help employees understand their total reward package and make a real difference to engagement.”

Employers with decent pension schemes will also want to ensure they are getting value for money, says Darren Laverty, partner at Secondsight. “So that when auto-enrolment comes in and non-members are obliged to join, they will not see the contributions as something the employer ‘had to do’ anyway”.

Many employers are using auto-enrolment as an opportunity to convince staff about pensions, says Alex Thurley-Ratcliff, strategic consultant at Shilling Communication. “If they can show an employee who was not in a scheme that they are now certain to be better off in retirement and for only a certain amount out of their take-home pay, then that is a great starting point,” he says.

There has seldom been a more important time to communicate the value of pensions to staff. Remember: nothing is automatic when it comes to engagement.

Read the full story on auto-enrolment (page 33) in the latest edition of Employee Benefits magazine or click here.