Unlimited holidays, flexible/hybrid working and corporate childcare schemes offering thousands of pounds in childcare allowance are just very few types of employee benefits on offer as businesses are desperately looking for the best ways to engage with and retain their staff in a post-pandemic world, which led to staff shortages across industries and a complete shift in employee mindset and the way they want to work.
The employee experience is under scrutiny like never before as workers re-assess their priorities and work-life balance, especially their relationship with work pushing businesses to act and find most creative of solutions.
The most expensive of all the benefits
Whilst for many perks such as unlimited holidays and childcare costs might seem immediately appealing, yet, a benefit such as workplace pensions that is probably the one of, if not, the biggest and by far the most expensive employee benefits that workplaces offer is not really being sold in a most compelling or even strategic way – 72% of employees are not actively engaged with their workplace pension, according to research by Atlas Master Trust.
This is probably somewhat unsurprising if this benefit and the value of it has not really been communicated in a way that is easy to understand. Lack of engagement goes hand in hand with lack of education and understanding on how pensions work, and many don’t realise how their money is being invested in.
According to a consumer survey conducted by Pensions and Lifetime Savings Association, more than half of workers (54%) do not know the size of their pension pot and let alone what’s in it. But imagine if HRs could actually get their employees to notice and care about the biggest employee benefit their company is offering and help people understand and engage with the benefit that will ultimately make a huge impact on their future.
Why should HR teams care?
So why should HR teams care and how can they make this vital and expensive benefit more prominent in the employee experience? Businesses and workplaces are making big sustainability commitments, particularly post COP26, but need to reflect these internally as well as externally.
One way to reflect these commitments internally is to align your organisation’s external sustainability commitments internally – to get your employees excited and talking about their workplace pension as a driver of net-zero or a way to have influence over company decisions, so that they can feel positive about their workplace and their impact on the world. More importantly, this is an opportunity for a business to be seen as a trail blazer in this space by being a workplace that supports democratising of the investment industry.
54% of employees do not know the size of their pension pot.
Communicating company’s ESG efforts and showing the positive impact employees can make with their finances and be part of the journey to a sustainable future can be impactful to employee engagement and certainly create a favourable environment for an overall employee experience and improve their financial understanding and wellbeing.
Employees do feel happier if they know their work is doing something good for the world, but when it comes to their pensions, many don’t realise that their pension contributions are being invested in listed companies that may not be the most ethical or have a long way to go to transition to low carbon, for example.
At Tumelo, we’ve seen that when employees have the opportunity to actually explore their pension investments, they gain a better understanding of how their pension is being managed and reportedly feel comforted by the sheer diversification of their investments.
Positive impact increases the engagement
We have also seen that members become more engaged in their pension when they feel they’re having a positive impact. A report by Franklin Templeton finds that significantly higher contributions could be invested annually by employees if responsible investing was incorporated into their pension, particularly for the younger generations.
Most recent analysis, from Make My Money Matter (MMMM), Aviva, and Route2, showed that making your pension green is 21x more powerful than giving up flying, going veggie and switching energy provider.
For example, those with an average sized pension pot of £30,000 who moved funds from a traditional to a sustainable option can expect to save 19 tonnes of carbon a year. This is not necessarily something that an employee would know about and could well be the secret weapon for the HR teams to engage and reward employees in line with their company’s sustainability ethos.
The launchpad for this secret weapon could well be a platform that enables to engage with employees by providing them a granular view of all the companies they’re invested in and enabling them to vote on real issues being addressed at those companies – leading to greater engagement and positive impact within the industry.
Article by Malika Shermatova, on behalf of Tumelo