Experian staff up contributions following education programme

The seminars, run by Wealth at Work, which examined the key considerations faced in the lead up to and at retirement, have also led to 11 per cent of employees changing their investment strategy and 2 per cent updating their target retirement age.

The first tranche of the programme involved 500 members over the age of 48, but the aim is to roll out improved packages – including seminars, webinars and a helpline – to all 9,500 Experian Retirement Savings Plan members who meet the age requirement.

With freedom and choice in pensions revolutionising the options available for most individuals, there is a desperate need for further education to support employees and pension scheme members, according to Experian.

Indeed, too many savers who have been auto-enrolled say they expect the minimum contribution levels required are the government’s recommendation for how much to save into their defined contribution pot; or simply do not engage with their pension at all.

Pension providers and trustees have a duty of care towards members to make sure that they are well informed about their options when accessing their money. 

But with retirees emptying their pots at record rates, the onus is increasingly falling on employers to pick up some of the slack and improve employee engagement with pensions, and educate them on the different at-retirement solutions.

Contribution levels are up and there is a far greater understanding of the at-retirement options and the importance of the right glide path strategy

Lesley Sutherland, Experian

Measuring value beyond ‘instant engagement’

The programme offered at Experian involved initial free guidance, which was supported by a regulated financial advice service that members could pay for to receive further assistance.

According to Wealth at Work, there are no plans as yet to offer a similar education programme to the plan’s younger members.

Lesley Sutherland, group pensions manager and head of pension projects at Experian, said: “We already have different providers for annuity broking and administration services; with a further possible provider for guidance and education in the mix, it was important not to overload members with too much information from different sources.”

After conducting research, Experian found that group seminars with a specialist provider, together with one-on-one financial guidance, alongside access to budgeting tools and regulated financial advice was the best solution for its employees.

Ms Sutherland added: “Attendance levels and feedback have proved that members value being given time to talk openly with their colleagues and a specialist provider about their plans for retirement.

“Contribution levels are up and there is a far greater understanding of the at-retirement options and the importance of the right glide path strategy.”

According to Paul Leandro, Barnett Waddingham’s workplace health and wealth practice partner, outsourcing specialist providers to educate employees is a growing trend.

But engagement needs to be strategic and so when measuring any progress, companies should therefore be looking at improvements in the context of the workforce demographics and individual circumstances, he said.

“Employers realise that because there is now a raft of options available to people, people can make ill-informed choices,” Mr Leandro said. 

“There is the danger of exhausting their pension pots too soon, and on the flip side there is a danger that people are not utilising their pension funds enough because they’re nervous about exhausting their pots too early.”

Unintended consequences of investment decisions

For education programmes to represent good value, employees must make the most of benefits on offer and employers should be able to gauge a change in behaviour.

Jonathan Watts-Lay, director at Wealth at Work, noted that when the employees were put through the programme, the fact that almost three-quarters came back with further questions was a positive sign.

He said: “When people know very little about the decisions they should be making, they don’t get support… but when people have that level of knowledge, they then realise it is important to get more help and then do that.”

But some companies could fall into the trap of looking at instant engagement. For example, they want to see how many extra people have used an online tool such as a pensions calculator or clicked on an email, commented Nathan Long, senior analyst at Hargreaves Lansdown.

“They almost measure it from a marketing perspective rather than an outcome perspective,” he explained.

Mr Long said that, generally, the easiest outcome to influence is to get members to increase their contributions. 

“Experian has done exactly what I expect someone who’s running this well to look at and examine, ‘has what we have delivered changed behaviour and improved their retirement future?’,” he added.

If a company encouraged its employees to solely pay more into their pension plan, and they do, there could be an unintended consequence of are they doing it even if they cannot afford to?

Mr Long said: “But if you’re only increasing it for one or two months, and you can change it back down thereafter, it’s a low risk. The bigger risk is not doing anything.”

Therefore, a key question to consider is: are your employees well informed enough to make investment changes?

For this reason, Mr Leandro said companies need to be well assured the consultancy they’re appointing is robust and good.

“Ultimately, employers want to get on with running their business,” he added.