It’s safe to assume that many of us place some value on regularly contributing to our pension pots. After all, with advances in healthcare, those born between 2018-20 are expected to live longer than what was predicted even just a few short decades ago. The Office for National Statistics has also predicted that 65-year-olds can expect to live another 18 to 21 years on average[1].
Therefore, our money needs to go further than perhaps we may have originally thought. As well as increases in life expectancy, there’s inflation to consider, giving us two factors to take into account when planning for our retirement years.
Employers’ role in encouraging pension contributions
A recent survey conducted by Employee Benefits found that more than seven in 10 (71%) employers are actively promoting pensions to their younger employees[2]. They’re doing this with targeted communications according to the survey.
A further 11% of employers claimed that they were planning to do this. However nearly a fifth (18%) said they had no activity of this kind planned.
Young workers taking an interest in pensions
It would seem that these proactive employers have an easy job. Further research released recently found that 82% of workers aged 18 to 22 believe that employees should start saving for their pension and retirement before the current default age of 22[2]. In response to this a group of pension providers have lobbied the government for a reduction in the auto-enrolment age to 18 by co-signing a letter to Chancellor Rishi Sunak[3].
It also revealed that more than six in 10 felt that all earnings should be taken into consideration for the pension contribution calculation – not just the amount above the lower 2021/22 threshold of £6,240. As well as this, more than half felt that the statutory minimum contribution amount of 8% was too low and they would prefer to see a rise to 12%.
This data tells us that much of the younger workforce are already taking their future seriously and thinking ahead to retirement planning. With cost of living rises and longer life expectancy, this is an encouraging sign. That said, employers can still play an active role in furthering education on pensions and other financial matters.
Promoting pension engagement to younger employees
If you want to take steps to ensure that your younger team members are engaged with their pension, there are a few things you can do.
Firstly, provide relevant training or communication. Financial education encompasses a range of subjects including pensions and the importance of saving for retirement. It can be an invaluable tool for employees of any age who want to start learning about money matters and how to manage their finances better.
Providing access to sound financial advice may assist those with queries about ISAs and saving for larger purchases, such as a first home, and how this can be juggled with contributing to a pension.
You could also try bringing in your provider to give a workshop or financial guidance sessions.
Whatever route you decide to go down, it would seem that many younger employees are open to learning more when it comes to their pensions and other financial topics.
