There’s little doubt that the UK is gripped by a pensions crisis at present, both in terms of public and private sector funds. In fact, the state pension age is set to increases to 69 for both men and women by 2039, as public resources become increasingly stretched.
In total, pension liabilities in the UK grew to a massive £7.6 trillion at the end of 2017, with a private sector deficit also impacting negatively on workplace schemes.
This is a huge concern in the current climate, particularly for workers who are beginning to plan for their retirement. This is why companies should take a proactive approach and offer clarity to their workers concerning their pensions, so that they can alleviate concerns and potentially boost productivity.
The Importance of Pension Clarity in the Current Economic Climate
When employer contributions now mandatory in the UK, every British worker knows that they can opt into a scheme that equates to 5% of your qualifying earnings when they start a new job.
This includes an employer contribution of 2% from your employer and 0.6% from the UK government, which supplement an individual account holder contribution of 2.4%.
Some employers will also offer a scheme where increased contributions can be made, while the mandatory levels are set to increase from April 2019. This means that your total pension contribution will equate to 8% of your qualifying earnings post-2019, as the government continues to turn to the private sector in a bid to bridge its own deficit.
The latter points are less well-known, as companies do not always advertise future increases in pension contributions or explain the core benefits to their staff members. Given the nature of the current economic climate in the UK, however, proactively marketing pension changes will help to keep workers informed while providing the type of security that can aid productivity.
How to Create a Culture of Pension Awareness
This type of approach places a considerable onus on employers, of course, who must communicate pension changes and updates to their staff members on a regular basis.
With this in mind, the next logical step is to create a culture of awareness within your business, so that each individual employee takes their own steps towards exploring the pensions market.
There are even practical tools that can assist with this, with pension solution providers such as Hymans offering advanced systems that enable employees to track their own accounts and contributions online.
The combination of these tools and increased awareness can help employees to understand the pension market and take control of their financial destiny, and this may well translate into greater productivity and morale over time.