Harnessing Pensions as a Retention Tool in the Public Sector
The LGPS is one of the largest pension schemes in the UK, with over 18,000 participating employers and over 6.1 million members. But what makes it so valuable?
In the dynamic public sector job market, retaining talented employees is paramount. One key strategy to achieve this is by recognising pensions as a vital retention tool. This blog post explores the significance of pensions and related retirement benefits as effective means to retain top talent within the public sector.
Specifically, we'll look at how the Local Government Pension Scheme (LGPS), a highly valuable pension scheme, can be communicated effectively to employees to maximise its effect as a retention tool.
The LGPS provides its members with:
A Secure Retirement Income: The LGPS is a defined benefit pension scheme, providing employees with a reliable and predictable retirement income based on their salary and years of service.
Tax Relief: Members of the LGPS receive tax relief on their contributions, and they have the option to take some of this tax-free cash as a lump sum at retirement.
Early Retirement: LGPS members have the option to take their pension and retire early from the age of 55, rather than the state pension age.
Flexibility and Additional Benefits: The LGPS offers flexibility in retirement options, allowing employees to pay more (or less if needed) into their pension, access tax relief on additional contributions and potentially take a tax-free lump sum.
Protection and Governance: As a statutory pension scheme, the LGPS is regulated and overseen by the government. This offers employees a level of protection, ensuring that the scheme operates in their best interest and follows strict governance standards.
Public sector employers should actively communicate the benefits of the LGPS to their workforces to encourage greater engagement with retirement planning. Focusing on this can help employers to retain staff by:
Ensuring greater financial security and job satisfaction by helping employees to create a steady income stream for retirement.
Demonstrating a commitment to employee wellbeing by offering valuable pension options alongside effective retirement education.
Gaining an edge in today's competitive job market, as comprehensive benefits packages including valuable pensions and retirement benefits alongside financial education are crucial to attract and retain top talent.
The Local Government Pension Scheme (LGPS) represents a particularly valuable pension scheme, and educating employees about its benefits is crucial.
By recognising the importance of valuable pensions and retirement benefits, employers can consciously build greater awareness amongst employees through effective retirement education in order to prioritise financial wellbeing. In doing so, employers can really harness the power of a good pension scheme and in turn, better retain staff.