Engaging your employees with retirement planning
As we live longer, many of us can also expect to work for longer and retire later. There’s a lot to consider when it comes to preparing for life beyond work. By sharing financial knowledge and the importance of saving for the future with your employees, they may be in a better position when they stop work.
Helping employees start their retirement savings
Workplace savings are vital for having an income to be able to live on in the future as the state pension is unlikely to provide sufficient funds for most. You can encourage your employees to get into good saving habits by making sure they understand their workplace pension.
Your employees could also look at additional ways to fund their future. Let them know about any other savings options that might be available through their workplace, such as stocks and shares individual saving accounts (ISAs), and general investment accounts (GIAs).
Explain how pension savings work
As a starting point for building pension awareness, cover the basics of how pension savings work. A workplace pension is tax efficient and designed for long-term investment – an excellent way for your employees to save for retirement. There are certain rules you must follow when talking about your company pension scheme to your employees. You can find out more about these on The Pensions Regulator website.
Explain that pension contributions are not all down to them – your employer contributions and tax relief adds valuable funds to their pension. Also, make sure they’re clear on the way their pension contributions will be deducted from pay and how tax relief is given. The way tax relief works depend on the type of scheme you offer, and on whether you offer salary sacrifice for pension contributions. Occupational pension schemes provide tax relief using the net pay arrangement, whereas personal pension schemes use relief at source.
This information is based on our understanding of current taxation law and HMRC practice, which may change.