Pensions are complicated – but they don’t need to be.
Understanding Pensions: The Key to Employee Financial Wellbeing
The impact of inflation and the rising cost of living have resulted in a workforce that is stretched thin, in their time and their finances. When the list of priorities is already so long for employees, it’s understandable that the wealth of pension information out there is far too daunting to approach - and likely to be low on the list of priorities.
It’s important for employees to be informed so they can make the best decisions for their finances; after all, an individual’s financial position and level of pension knowledge will determine how they plan to save for retirement.
For example, some public sector pension schemes like the Local Government Pension Scheme (LGPS) are particularly generous, with options to save tax-free and potentially retire early. But despite this, the LGPS has seen workers leaving the scheme in droves in the past few years.
Due in part to the cost-of-living squeeze, employees are reasonably apprehensive about where their money sits – but this seems to be doing more harm than good for the future of retirement. Clearly, there is work to be done to ensure that workers are fully aware of their choices and pension-related benefits. Employers must incorporate pension scheme education in their wellbeing strategy, or their employees could be missing out on an opportunity to grow and protect their savings.
Helping employees to understand their pensions is integral to supporting their future financial wellbeing at this time, whether this be around the annual benefit statement, the end of tax year or simply how their scheme works. It’s crucial for employers to provide effective and comprehensive pension education to their workforces; so the next financial crisis doesn’t become a retirement one.