Pensions: it’s more important to discuss spending than saving

It’s more important to discuss spending than saving

Motivating a workforce to spend more – or any – of their hard earned income on pensions can be difficult.


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I’ve seen plenty of examples of high quality, high impact internal communications campaigns, which do a great job of explaining and promoting the benefits of pensions. However, I firmly believe a fundamental issue is being overlooked. Many employees may believe they simply don’t have any spare income and, while agreeing that pensions are a good thing, won’t engage in communications relating to investing in a pension – no matter how good they are.

For example, recent graduates may be focused on paying off large student loans and saving a deposit for their first home, while older employees could have accumulated debts for any number of reasons - or may be finding mortgage commitments unsustainable as they approach retirement.

This is not an insurmountable challenge for employers wanting to promote pensions. My view is that the first step in the conversation about pensions, has to focus on helping employees to actually reach a position where they feel able to consider a pension – and engage in internal communications about it. This means helping them to tackle any existing financial problems as well as, more broadly, becoming more financially literate.

For instance, an employee assistance programme which may already offer support with issues such as going on maternity leave or health - such as quitting smoking or managing stress - could also help employees to learn how to get their finances under control.

This might take the form of offering employees the right advice about restructuring debts and understanding the difference between a student loan (‘good’ debt) and an unaffordable holiday purchased with a credit card (‘bad’ debt). Introducing discount schemes as part of a flexible staff benefits programme could also offer employees an opportunity to reduce day-to-day spending – from childcare vouchers to agreeing staff discounts with retailers.

Positioning conversations about pensions in this way, I believe, represents a smarter approach and helps employers to lead employees towards investing in a pension. Helping to remove any money-related worries of employees has wider benefits of course, from reducing absence from work to deal with personal financial issues, to having a workforce which is happy and better motivated.

It may sound counterintuitive, but if you want to get employees interested in pensions, talking to them about their spending could be more effective than talking to them about savings.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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