A tale of pension messaging gone well, (if slightly less brutal than a similarly well-known film). Why Epping? Because it sounds a bit like Ebbing, and I am easily persuaded to cash-in on popular cultural references.
If I was delivering a pension message to Epping, what would be on my billboards? What three questions could I ask that would make people think, realise the value of their workplace pension and appreciate this benefit.
Within our pension workshops we like to play a nice, easy, inclusive game at the start of our sessions, to get everyone participating. It goes like this:
By now, there is normally nobody left standing.
Disappointingly, many hundreds of employees have played this game with us and the outcome is usually the same. The crucial problem is, nobody feels comfortable reading all the guff their pension provider sends them, so they don’t read any of it. And in a stroke, half a tree has also been killed for nothing!
Shockingly, many employees do not take all the money available for their pension from their employer. This is the easiest money to be had on the block, especially if the employer match is generous and supported by salary sacrifice. For an employee paying basic rate tax, £100 paid into a pension gross, only costs £80 (as basic rate tax is given at source, of course). However, within a salary sacrifice scheme, National Insurance Contribution (NIC) savings are made by both the employee and the employer, which can also be paid into staff’s plans. So, in the same scenario, the maths could look like this:
Cost to member (reduced take home pay) £68.00
Amount invested (if the employer shares its NIC saving) £113.80
It costs the employee less and more goes in. Feels like a no-brainer, right?
Yes, tell your staff, it is all theirs. Every penny of it, from the minute it lands into their pension accounts (and they should think of it like a savings account). I may go all evangelical here, but please tell them, ‘IT IS YOUR MONEY’, and the more they can accumulate the better. It is not owned by the company, the taxman, the Government or an adviser. The more your employees can personally connect with, and contribute to, this account the better. In fact, if the combined total of employer contribution, NIC savings, tax relief and employee contribution can get close to a mid-teens percentage of salary, for every year of their working life, your staff may have very pleasantly surprising retirements.
Employers, these are three key messages you need to be getting across to your workforce. There will be many employees that cannot say ‘yes’ to these three questions, as for many of us, pensions are all too often ‘out of sight, out of mind’. So, when it comes to pension communications – don’t hang back, go big and go bold.
This article was first published with REBA on 22 March 2018