Expert perspective: Employers face challenges in driving engagement with pensions

In the current environment, pensions and long-term savings can sometimes become an even harder ‘sell’ for employers. With many employees feeling the squeeze from soaring costs of living, it’s easy to see why some people might reduce their pension contributions in favour of having a bit of extra money in their pocket today.  

This is a concerning trend for employers who are looking to foster a financially secure workforce, as they recognise the impact that underfunded pensions could have on their employees’ future wellbeing. Employers are increasingly searching for ways to make pension engagement accessible, relevant, and compelling in the here and now. 

The three challenges impacting pensions 

We see three major challenges affecting pensions… 

Firstly, present bias, where people are so focused on their current situation that they overlook what is waiting in store for them twenty or thirty years down the line.  

Secondly, employees are often overwhelmed by information overload when it comes to benefits and rewards. They start a new job, and they’re immediately bombarded by swathes of information and choices. The result is people burying their head in the sand and ignoring pensions in favour of simpler, ‘fun-focused’ perks.  

Finally, there is the complexity and perceived hassle that still surrounds pensions. Many employees admit they don’t fully understand how pension contributions work and why it’s in their interests to start saving today.  

How employers can overcome these challenges 

The way around these challenges is to focus on education and engagement. We see many of our clients increasingly rolling out ambitious and creative programmes to make pensions and long-term savings more accessible, understandable and aspirational.  

For instance, some employers are looking to present information in more vivid and eye-catching ways, visualising how people’s lives will be affected by the savings decisions they make today. Employers are trying to bring the realities of pension savings to life by highlighting retirement living standards – mapping out in detail how their employees’ retirement lifestyles will be defined by the amount of money they are able to save. 

Language is also vital to drive engagement with pensions; employers need to avoid jargon and communicate with employees in a simple and open way, establishing dialogue and providing the right information at the right time.  

Employers should also focus on demonstrating the return on investment that employees receive when investing in pensions. For every £100 they invest today, what does that mean for their future, when you consider employer contributions, tax savings and fund growth? When set in the context of retirement living standards, these types of projections can be incredibly powerful and motivating. 

Empowering employees to invest in their future  

Employers have a unique opportunity to reshape how employees view their pensions by making savings more relatable and engaging. Through strategic education, clear communication, and showing employees the tangible impact of each contribution, companies can help staff build financial confidence in their future. Positioning pensions as an essential and empowering part of the employee value proposition can create long-term value for both the employee and the organisation. 

For more practical advice and learnings on all things reward and benefits, download our report: Navigating trends from our Big Benefits Report, where six Benifex experts share their perspectives.