One area in which we’re all better served than at any time in history is our ability to access data.
The advent of the digital age continues to make that which was previously locked away available to all. We are surrounded by a swirl of ready information in almost everything we do.
Why, then, has this avalanche of information not resulted in a more enlightened, better informed populace? Surely, with all the evidence to hand, the decisions we make will be the right ones?
We all know that’s not the case. As professionals navigating clients through the pensions landscape, we have to use our guiding experience to help them make sense of what the data tells us. It still shows people making poor decisions and, frankly, being baffled when their thoughts turn towards working beyond 50.
We asked more than 300 employers if they offered any kind of guidance, support or advice to this age group on retirement planning. Sixty-one per cent did not but the 39 per cent that did, did so largely in partnership with external consultants or brokers.
Inevitably, this raises the question: what’s preventing the 61 per cent from engaging with this cohort in this way?
Our survey pointed to familiar spectres blocking further progress. Concerns over cost – 61 per cent – and fear of falling foul of regulation – 58 per cent – were cited as the main, understandable reasons for shying away from this task.
As many of us know, guiding corporate clients through this area calls for patience and it helps to bear in mind some accessible principles. Helpfully, we’ve got three.
First is to think about challenging the triple default. This is the tendency for members to automatically assign retirement age as 65 (moving the scale to the right can make a big difference in what you have to retire on); never shifting their investment from the “default” fund and never changing the size of their contributions.
Decisions taken in relation to these three aspects can have a significant impact on retirement plans and aspiration without too much pain in the present.
Secondly, tax. Specifically not paying more than you have to in retirement and at key junctions (such as accessing your pension for the first time) is another important area to engage with corporates and their employees. They will inevitably need guidance, if not advice, to be fully informed enough to avoid handing over too much to HMRC.
The third thought is thinking itself. It’s impressing on clients that, having addressed, or even re-engineered the triple default and covered off tax, they can play an active part in what to do with their nest egg remaining, large or small.
As many of our fellow practitioners know, this consideration is rarely at the top of someone’s “to do” list unless the march of time means it absolutely, urgently is on top of the “really-has- to-be-done-now-list!”
And what’s becoming equally f amili ar is the p ar t our communications play in nudging people towards thinking these three thoughts and, even better, taking action.
In so doing, we can help our clients tell their employees the compelling and urgent story the data tells us.
Ultimately, they can be helped to, at least, take active steps towards funding a retirement they can recognise.
And there’s also some further visualisation to help them recognise if they are on the right track. To demonstrate how broad our shoulders are, this isn’t even our research but does do a good job of pulling together another list to check progress against.
Being financially comfortable, able to spend time doing the things you love and being with the people you love, together with the chance to keep learning and developing and, overall, having a sense of purpose add up to a happy retirement.
By continuing to marry our understanding of the data with the ability to tell a compelling story to the businesses who need our help, we can play a central role in helping people achieve their aims for a life beyond work.