I love a good Halloween party, especially when everybody gets into the ‘spirit’ of it and fully embraces the fancy dress.
For this year's costume I pondered various scary outfits - Michael Myers, Jason Voorhees, Freddy Kruger - but I settled on the scariest of all, the pension statement!
Yes, I might look a bit odd at first as my friends look on with a puzzled face, finally asking ‘who are you supposed to be?’ and when I reply ‘a pension statement!’ I’m sure they’ll look even more bemused.
However, when I start to explain that a) at least my outfit is original and b) do you realise how scary your pension statement is? I hope that they’ll get where I’m coming from!
So many questions
Surprisingly, I do often get asked about pensions on nights out with my friends. ‘Would I do this?’ ‘Would I do that?’, ‘How much should I be saving?’, ‘How much should I have in my pot by now?’. Clearly these conversations don’t dominate the night (I don’t just want to bleat on about pensions all night, not when there’s my epic stamp collection to talk about!).
But friends do use my knowledge and experience for a bit of guidance when needed (for the price of a G&T of course).
Anyway, back to the pension statement.
It’s one of those things we all get each year (or should do) and typically finds its natural home - quite quickly – at the bottom of a pile of paperwork or in a drawer to be looked at later; which of course it never is...
But why do we do this?
For me it’s a variety of reasons:
- The statements look complicated and often aren’t easy to understand.
- We don’t look after our pension savings as seriously as we do our bank savings.
- We often don’t want to think about getting old, so we ignore things that point in that direction!
So how can you change this behaviour with your employees?
Well, one of the most common questions that I am asked in pension clinics is ‘can I explain this statement?’.
In all honesty, it’s really easy and yes I can, in just a few minutes!
When employees understand that the seemingly poor annual pension projection on their statement is based on the assumption that they use their pot to buy an annuity that both increases in payment each year and pays 50% to a spouse/dependant on death (both of which reduce the level of income they would receive) and that they don’t have to do any of this, they become immediately more enthused.
Another few minutes explaining that the projected pot of cash is likely to be higher than they will have personally paid in over the years due to employer contributions, tax relief and investment growth and suddenly that statement doesn’t look quite so scary!
Unfortunately, what does remain scary is the thought of asking what it all means and this is where you can really help your employees by providing clear communications to help them understand. Or even better, by facilitating pension 1:1 meetings which we know are really effective and what many employees want.
For more information, contact our York team by clicking here. We're not scary, and we'd love to talk to you!