Helping employees take control of their retirement savings may not only reduce their anxiety about the future, but it may also help them focus on the ‘now’ at work.
According to Aviva’s latest research, more than three in five people (61%), feel stressed when thinking about retirement. Across all age groups, 71% are concerned whether they’ll have enough money to do the things they want in retirement while two thirds (66%) worry if they’ll have enough money to retire as early as they’d like.
In the current socioeconomic climate, some employees may feel like their table is wobbling as they try popping their puzzle pieces in place. And the picture they’re building may not be clear.
But with some support from employers and workplace pension providers, pension savers can feel more in control.
Here are 9 points employers can highlight to help retirement planning click into place.
- Time – employees should aim to save for retirement at least 40 years before planning to retire.
- Amount – it may seem challenging now, but employees should aim to save at least 12.5% of their salary towards their pension every month. Reminding them that, as an employee, they also get a workplace pension contribution and tax relief towards the target may be encouraging.
- Final pot size – employees should aim to build a pension pot of at least 10 times their annual salary by retirement.
- Tax relief – encourage employees to take advantage of the tax relief offered by the government to boost savings. Employees may be interested to learn that, when saving into a pension, for every £8 saved, the taxman adds an extra £2.
- Investing wisely – helping educate employees on the basics of investment could help them take more control of their later in life planning. Employees should understand that their money is invested to help it grow over the long term, however, the value of their pension can go down as well as up and they may get back less than the amount invested.
- Keep checking – much like taking a moment away from a puzzle may help reframe the picture, encouraging employees to ‘check back in’ with their pensions is important. Annual pension statements can be used to track retirement targets and help employees build a clearer picture of their progress.
- Online tools – pointing employees towards free online retirement calculators can help them keep feel more in control of their retirement planning.
- Reframing expectations – reminding employees that life expectancy in retirement could be 20 years or more may help them reframe their retirement picture and save more appropriately. Also, the Pension and Lifetime Savings Association’s (PLSA’s) Retirement Living Standards have a useful guide on how much money is needed for a Minimum, Moderate or Comfortable standard of living in retirement.
- Lost pensions – the latest research, from the Association of British Insurers, says people in the UK have lost track of as many as 2.8 million workplace pension pots with an average value of £9,470 per pot. Encouraging employees to check with the Pension Tracing Service to find any lost pension savings may help get them towards their final target.
With support from employers, and regularly checking their pension statements to see whether they’re on track for the lifestyle they want in retirement, employees can take steps to ease the squeeze of pension pot worries.