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Seven key indicators to measure pension engagement

We explore what it means for employees to be engaged with their pension, how you can measure it and why these measures are important.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in. These articles are intended for employers and HR professionals, not for individual investors.

Improving employee engagement is an important topic for employers across the UK. One key area where it can be useful to track engagement is with your pension offering.

As part of our pension governance programme, we pinpoint actions and behaviours which are indicators for good pension engagement. The member behaviour data and engagement scores are useful for determining benefit design, talent acquisition and improving retention.

So, what are these indicators of good pension engagement?

Contributing more than the minimum

How much members contribute to their pension affects how much money they’ll have to live on when they stop working.

Reviewing contribution levels, understanding the implication of leaving pension saving too late and choosing to contribute more than the minimum level is a simple way of participating more.

The current State Pension, with full National Insurance record, pays £10,600 a year. The gap between what people think you’re going to earn in retirement, and what many are set to receive, could come as a shock. And relying on auto-enrolment minimums alone is unlikely to bridge the gap.

It’s important to gauge employees’ understanding of the impact their contributions can have on their retirement.

Examining how many members make use of a matching contribution structure can also provide valuable insight into how members value what’s on offer.

Choosing your own investments

Paying in more isn’t an option for everyone. How investments perform is another way of boosting the potential value of a pension. All investments can fall as well as rise in value. You could get back less than you put in.

Understanding the investing habits of your workforce can be beneficial.

We look at the percentage of your workforce choosing to invest outside of the scheme’s default fund as a key engagement metric. This can indicate how confident your employees feel with making their own investment choices and their appetite towards investment risk.

Consolidating existing pensions

Having multiple pensions can make it difficult to understand how much you have saved up. It can also be time-consuming and frustrating speaking to lots of providers to understand how much you have, where it’s invested and what options are available when it comes to retirement.

Considering where to consolidate pensions is an important decision. It’s a good idea to compare the services and charges of both providers before going ahead as well as checking that no valuable benefits or guarantees will be lost on transfer.

The Pension Tracing Service estimates there’s around £20 billion in lost pensions. Consolidating pensions is about more than just keeping things together for ease of management. Lost pensions can have a significant impact on the amount available to you at retirement. We look at the pension transfers as a measure of engagement.

The number of people transferring can also provide good insight into how well the change to a new provider has been received by employees.

Registering for online access

Online banking has soared in popularity over the last few years, driven in part by its increasing ease of use. Looking after a pension shouldn’t be any different.

Registering for online access is a positive step on the journey to increasing a member’s awareness of their retirement goals.

Managing a pension is no longer a complicated task for members – digital platforms make it easier and more intuitive than ever before.

By offering members a digital experience, they’re more likely to look at their contributions, learn more about investing or consider pension consolidation.

Having immediate access to information online makes it easy to keep things on track.

Becoming an active user

Whilst it’s interesting to look at the levels of online registrations, it doesn’t necessarily tell the whole story.

Someone who registers for online access but never logs on is unlikely to be engaged. We think it’s important to check in regularly at least once every 12 months. It’s important to see how and when members are making use of digital channels.

Nominating pension beneficiaries

Nominating a pension beneficiary helps avoid hassle and stress for loved ones in the event you pass away. People assume life assurance nominations also covers their pension – which isn’t typically the case.

Without a beneficiary in place, it’s harder for pension providers to determine who should receive the money. A nomination lets your pension provider know who you’d like your pension to go to and they need to take your wishes into account.

Building wider financial resilience

Pensions are a great way of saving for retirement, but it’d be naive to think retirement is the only financial goal people will have during their careers.

Some people may also need to make use of other savings accounts to divert their pension entitlement for tax reasons.

Whether people are building an emergency cash fund, saving for a house deposit or are affected by pension allowances rules, understanding the wider savings needs of your workforce can help inform more extensive benefit offerings.

We offer a wide range of savings and investment products alongside workplace pensions. With the information available, we’re able to provide employers with a wider holistic view of their workforce’s financial needs.

Want to learn more?

We take pension engagement seriously. It’s important for employers to know how their employees interact with their pensions, how they compare with their industry peers and how it improves the retirement prospects of employees.

If you’re interested in learning more about how we can help you improve employee pension engagement, get in touch with our experts.

Speak to us

Call us on 0117 314 1783

Email us

If you prefer, you can email us directly.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in. These articles are intended for employers and HR professionals, not for individual investors.

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