But how much should employers be doing to encourage employees to save for retirement?
I’m at the 2009 NAPF Annual Conference at the moment and this is one of the themes of the conference. Postal communications do not seem to work – it is face-to-face presentations and discussion forums which make a difference.
I recently delivered a lunch-time talk to a client’s employees on what the basic State Pension provides and how much you need to put away to achieve just a moderate level of income in retirement. My client contact and I were surprised at the sheer number of people who came along. My feeling, from this experience and various stories being told at the NAPF conference, is that employees really are ready to sit up and take notice. It is clear that they want to understand better how State Pension benefits work, the impact of the budget for high earners, the full range of savings options (not just pensions), how to go about making investment decisions in the case of DC benefits and how to get more information.
If you are an employer, with State provision changing, the arrival of auto-enrolment and employees seeming to be more engaged at the moment on the subject of saving for retirement, it would be worth thinking about some face-to-face time with your employees on these issues.
The FSA and Pensions Regulator have recently published a very readable guide on what employers should and should not do in terms of giving advice. If you haven’t already got one, access to a website providing up to the minute benefit statement and fund values for your employees is becoming a must have.
As a speaker at the conference said: “Education, Education, Education – don’t underestimate the impact of lack of knowledge and understanding”. Employers – your employees need you!
Maria Stimpson is a partner at Allen & Overy LLP.
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I have just read an article on a recent survey (by Aon Consulting) that said that younger members of defined contribution schemes are recognising the importance of saving more effectively for retirement. Apparently 70% of those aged 25-34 fear not having enough money more than any other aspect of retirement, compared with half of the 55-64 age group, and 34% of 65 year olds.
I don’t ever remember being concerned about my retirement at that age – may be the young are becoming more aware. So I agree – get ‘em whilst they’re young!
Also spoke to a pensions manager recently who completely supported the face to face approach – employers do need to do more, now more than ever before in my view.