With the introduction of automatic enrolment, more and more of us are now paying into a pension pot every month through our employer. In order to get the most of this retirement saving, however, it is important not to just let your pension sit unnoticed and unchecked.
Keep an eye on your funding
While it is easy to let your pension savings accumulate as they are automatically taken out of your salary, this doesn't necessarily mean that you're set for the retirement of your dreams. And with young people having lofty ambitions for life after work, it is vital to start getting to grips with your pension as early as possible.
Research from Aegon highlights the importance of employees developing a savings habit. Aside from embracing auto-enrolment, they suggest that employees review their pension at least every half-year, to make sure they're still on track and that the performance of their investments is heading in the right direction. It's also important to review the level of investment risk you are happy to assign to your pension pot. After all, if you don't check your pension every once in a while, you won't know what you stand to lose.
Encouragement could be key
Aegon's research further shows that employers play a key role in helping their staff build up a pension, with 54% of employees believing their employer has a responsibility to help them plan for retirement. Nearly three quarters of surveyed employees (73%) said they would welcome some time each month to check their workplace pension during work hours, but a similar amount, 75%, felt they aren't being encouraged to do so, and 21% even said they are not allowed to check their pension at work.
Given the amount of effort employers have put into setting up their workplace pension schemes, and the fact that this is often one of the biggest employee benefits, it is surprising that employers aren't encouraging their employees more. Since many (40%) employees said that checking their pension every quarter would be enough (with 71% espousing 15 minutes per month as a preferable time commitment), it wouldn't cost much for employers to encourage their staff to save.
Aside from a greater appreciation of the benefit their employer is giving them, employees who are allowed to check their funds are also more likely to review their fund value, ensure that their contributions have been paid and are correct, and use tools to for instance understand the impact of increasing contributions.
Kate Smith, head of Pensions at Aegon, reflected on the findings: "Life often gets in the way of keeping track of your pension. When you get home after a day's work, the last thing you might want to do is get online and review your pension account – people have busy lives. As the main route for employees to save for retirement, the workplace is the perfect place to encourage employees to engage with pensions. Our own experience in the workplace has shown a 30% increase in employee engagement levels when the employer has endorsed the pension and encouraged employees to take action. This demonstrates how a small change from an employer can make a big difference to engagement levels in the workplace."
What can you do?
If you're an employee, you could suggest the introduction of a regular pension check at work, aside from making sure your own pension is up to scratch. Look at our guides to get you started and consider using a retirement advice service if this is not offered through your work, in order to maximise what you can get out of your funds.
If you're an employer, consider the benefits of promoting your pension scheme and encouraging your employees to check it regularly. Greater appreciation for the scheme you've set up may be reason enough, since engaged employees are more likely to stay. And if you have an advice facility in place, send reminders so that people actually know it exists. When you think about it, what would you really lose by allowing your employees to review their pension for 15 minutes every month?
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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