There’s no getting away from the fact that it’s those earning more (and those already with sizeable pensions savings) that benefit most from the Government’s recent announcements on pension saving limits.
But any publicity for pensions is good publicity, right? This is an opportunity to engage all members on pensions.
If the ‘higher earners’ (or those with significant pension savings already) immediately make the most of the increased tax efficiency, we should take note. This surely reinforces the fact that pensions are a savvy way to invest for the future.
As my colleague Jayesh Patel describes in his article: How companies can help DC pension savers with the rising cost of living there are some constants when it comes to the advantages of pension savings: matching contributions for most, tax relief for all, and investment growth over the longer term. We have been looking at the potential impact on 30-year-old Mo, earning £30,000. In an upcoming article we’ll shed some more light on Mo’s position, but in simple terms, Mo’s 3% contribution sees £900 going into his pension pot each year, with a £612 reduction in take-home pay (thanks to tax relief and NI savings) – and that’s before any potential employer match. We should be taking this opportunity to inform and educate, regardless of financial status.
And it’s not all about tax and contributions. We have a lot to tell all pension scheme members, with two other significant changes on the horizon to help bridge the huge UK pensions savings gap:
- Changes to auto enrolment legislation, to ensure lower earners and younger workers have equal pension savings opportunities.
- The Pensions Dashboard, to give members greater visibility and transparency over their pension savings and support them to plan for their future.
Where should schemes focus their engagement efforts?
At WTW, we use a simple framework in our discussions, which we’ll show through the lens of recent pensions tax changes:
This could be targeted emails to specific segments of members, short films delivered by experts, online education right through to group and individual pension guidance by qualified specialists.
Want to talk things through?
We would be delighted to share our approach, templates and answer any questions you may have.
To request a meeting, please contact your WTW consultant or one of the below.
Contacts
