Employers may be best placed to help with this, both in terms of day-to-day pension experience and financial education. For the current workforce, this can be a lot easier to achieve through auto-enrolment and internal communication channels. However, this becomes much more difficult when members no longer work in the business.
For large employers who have significant resource to dedicate to the cause, this is much less challenging. But many smaller employers lack this luxury, and this can be to the detriment of employees and members of their pension schemes.
…master trusts can be a solution for smaller employers, providing access to financial education supported by a high quality and efficient day-to-day member administration services.
Defined Contribution (DC) and Defined Benefit (DB) pensions master trusts can be a solution for these smaller employers, providing access to financial education supported by a high quality and efficient day-to-day member administration service.
Financial wellbeing in focus
These are challenging financial times for many, with the high cost of living, economic uncertainty and volatile markets making financial wellbeing a topical issue. Those with no savings will be seeing that their money isn’t going as far. Those with cash savings will be aware that those savings are losing value in real terms as inflation remains elevated, and those with investments are likely to be seeing any growth outstripped.
Higher interest rates are making mortgages more expensive at a time when everything else is more expensive too. It’s not surprising then, that according to the Money and Pensions Service, as many as 24 million adults in the UK don’t feel confident managing their money. Recent statistics from Champion Health show that financial pressure is the top cause of stress outside of work (above relationships, parenting, caring responsibilities, ill health and bereavement). Many companies are therefore acutely aware of this pressure.
External support for employers
Employers are well placed to help their pension scheme members but may not have the resources to do that without some external support. Helping scheme members to engage with their pension, to recognise the benefits of saving into a pension and (for those lucky enough to have one) understand how their DB pension could support them in retirement, is critical. For some, it will be their first taste of considering their financial future. For others, it will be part of a wider financial plan. Either way, financial education for all and access to advice underpins financial wellbeing.
Pensions are clearly hugely important, and members need to understand the type of pension they have, and the options provided. We believe financial education should be wider than that. It should encompass everything from budgeting, saving and cashflow management, to understanding what’s going on in the economy and financial markets and why that matters. It should include knowing when an ISA might be appropriate, how insurance works, the importance of getting tax reporting right, having a Will and Powers of Attorney in place and how to make the most of tax allowances and reliefs.
Information access
Financial education is not just about a broad range of topics. It’s also about appreciating that different people want to access information in different forms. Some prefer short videos, others like more detailed written information, some prefer interactive webinars. All can be part of a comprehensive suite of materials available for master trust members.
Helping employees and members is about understanding that managing finances is a challenge for many – one that is causing stress and impacting work and life outside of work. It’s about knowing what you as the employer can provide support with, and what kind of support you need to bring in from outside of your organisation.
Pension scheme administration: what does excellence look like?
In addition to providing pension scheme members with financial education, and the option to take this forward to guidance or advice, a crucial factor in a member’s financial wellbeing is an excellent pension scheme administration service.
…a crucial factor in a member’s financial wellbeing is an excellent pension scheme administration service.
In our experience, if members have a question, they want to speak to someone that will handle their enquiry from start to finish, providing the human touch that is so often missing. Of course, members need support to be professional, expert and courteous but they also want to deal with people who will own the issue and respond to agreed deadlines.
Access to a dedicated specialist team with a specific phone number and a personal approach is particularly important. Many members contact their pension scheme due to milestones in their lives such as redundancy, divorce or bereavement.
Members want to feel reassured that when they call their pension scheme administration service, they will not be rushed off the phone and that there will be an empathetic, patient and friendly voice at the other end of the line. They also want to feel confident that they will be given all the information they require to make a decision.
Many members are not familiar with pensions jargon. A master trust which subscribes to the principles of the Plain English Campaign’s Crystal Mark ensures communications with members are clear and easy to understand.
Finally, given increasing concerns about the risk of scams, a dedicated Scam Protection team with the ability to identify and address any pension scam warning signs is an essential part of any administration service.