‘Young, dazed, and disengaged’: why and how you should motivate your younger employees to take their pension seriously

When you bring up ‘pension’ or ‘retirement’, it can sometimes cause younger members of your workforce to disconnect– it’s unfortunate but it’s true, and in a way you can understand why.

For those of us that are approaching the age where we may have to start seriously thinking about our preparation for retirement, think back to when you were in your 20s and 30s; could you in any way imagine or relate to the person you are and the life you have now? The answer is likely no, and therein lies the heart of the issue and why many younger workers are disengaged with their pension.

Key takeaways

1. Why it’s important that your younger employees are engaged with their pension
2. How reframing the pension conversation can better illustrate its value
3. The value of pension governance and effective communication
4. Why pension education could be key

Why engage your younger people?

Around 1.43 million young workers in the UK are thought to have paused their pension contributions to increase their ‘take-home’ salary¹, as their priorities commonly swing towards having more readily available cash now to cover rent, bills, and food expenses, rather than saving money that they won’t be able to access until their 50s or 60s.

As an employer, you may save financially on the budget that would have been used on contributing to their fund, however, encouraging your people to engage with their pension can come with potential benefits for your business, including:

• The ability to demonstrate your duty of care to your staff: going above and beyond to show your people that you are committed to their financial future and their wellbeing.
• Giving your people the freedom to retire at a suitable age: helping to ensure your people don’t become resentful and unmotivated as they are unable to afford to retire at the age they want.
• A stronger ability to retain your people: possibly saving you money on frequently hiring and training new staff, a cost which could be more than the pension investment you would be saving on.

But how do you do it? While it can seem like Mission Impossible, here are 3 ways that could help your younger employees engage in their pension and start putting the foundations in place now for a financially secure retirement.

1. Reframe the pension conversation

Fundamentally, paying into a pension can be seen as a short-term sacrifice for a long-term gain, and typically the emphasis is placed too heavily on that first element. For someone in their early career, the thought of potentially having a couple hundred pounds more to spend a month can be considerable – that could be their monthly food expenses taken care of, a few nights out with friends, or a valuable contribution towards saving for their first property. When it’s framed like this, it’s unsurprising that, without the right education and guidance, some younger people are choosing to lower or even stop their pension contributions altogether.

When discussing pension with your younger people – ideally when they join – try to ensure your language focusses more on the investment into their future. A stronger message would be to make it seem more ‘real’; share resources that can help them visualise the value of their pension fund throughout their future, and illustrate the benefit of investing more into their pension now, rather than waiting until they’re older.

2. Pension governance and communication

A robust pension oversight process allows you to analyse not only the data and trends within the wider market, but also the specifics of your own scheme, how it’s performing, how your people are engaging with their pension, and the impact of the actions being taken.

This data is very useful when examining how, or even if, your younger employees are interacting with their pension, as you can then plan a communication strategy that targets these employees and empowers them to take charge of their financial futures. It also allows you to ensure that the scheme is appropriately structured to deliver good retirement outcomes for your people.

3. Education

One of the main reasons your younger employees may not be fully engaged with their pension is because they haven’t had the necessary education that shows them why contributing at a young age could be to their benefit. As mentioned, your younger employees may be of the view that it is better for them to have extra money each month now rather than pay it into a pension.

You could use external specialists to host informative sessions for your people, illustrating the importance of maximising their pension contributions early in their career and answer any other pension-related questions they may have. Equipped with this information, your younger employees may better appreciate the importance of a pension, understand the benefits of contributing to their retirement early, and feel more empowered to take the necessary steps to safeguard their financial future.