So what makes a good workplace pension plan?
Whether your employer provides a workplace pension plan, or if you are an employer offering a pension plan to employees, the real advantages of workplace pension plans are often overlooked.
If you’re an employer, it’s important to put in place the best workplace pension for your staff, in order to ensure they are empowered to achieve better outcomes at retirement. It’s also important to work with your pension provider to find ways to help employees understand the following three key things:
1) The amount of savings the company will make towards staff pensions
If you are an employee and your employer provides a workplace pension, your employer will often match or exceed your savings into the plan. This is a massive benefit as it’s not often that your savings will be boosted by anyone but yourself. When those savings are coupled with the long term impact of investment growth, your pension fund can grow significantly. It’s also worth noting that your pension savings are also eligible for tax relief up to certain limits.
2) The importance of people making their own pension savings
Employees need to understand that their pension plan is a long-term savings vehicle. Employees need to have a long-term target, be regularly made aware of where they are versus that target, and understand what they need to do to achieve that target. To really empower employees, pension communication should be personalised to each employee. If people receive personalised communications which set out where they are versus their target, it helps them take appropriate action and ultimately leads to better outcomes at retirement.
Pension providers are increasingly offering online tools and smartphone apps to help people better understand pensions.
Tools like our app, Irish Life EMPOWER, offer people a handy way to keep track of their pension fund. Irish Life has found that those pension plan members who use the online tools available tend to save more and have better projected outcomes at retirement.
3) The investment options available to them
Part of having a good pension plan in place is having an appropriate, easy-to-understand set of investment options available to employees. Some employees like to take control of their investment decisions themselves and actively choose from the investment options available. However, most people don’t make an active choice and end up in the plan’s default investment choice, which makes it very important to have the best possible default investment choice in place. One size does not fit every employee when it comes to investments and it’s important for employers to ensure that their pension provider is providing a good choice of options.
It’s important for employers to review their workplace pension for their staff regularly to ensure its helping staff to secure better outcomes at retirement. For employees, making the most of a workplace pension means understanding the basics, setting realistic saving targets and using the online tools available to keep track of their pension plan.
Click here to read the full article from the Sunday Independent (sponsored by Irish Life).
