One of the most important financial responsibilities employees need to be advised about is their pension. Poor pension planning can, can after all, have huge consequences later on. With that in mind, here are some of the key mistakes you’ll want to advise employees against.
Not planning at all
It seems strange, but there are still many people out there who simply aren’t planning for a pension at all. The current state pension would lead to an income of well below £10,000 per year, which isn’t enough for a reasonable standard of living. It’s important that employees don’t bury their head in the sand. They may need help to deal with other financial matters such as debt and home renting or buying first so a package of help may be needed.
Leaving it too late
While it can be tempting for employees to ‘live it up’ now and save later, the consequences of doing so can be substantial. Indeed, someone wishing to have an extra pension income of £10,000 would, at the last count, have to put back £105 per month if they started at the age of 25. If they waited until they were 35, they’d have to save £195 per month. The earlier employees get started, the better. However, it’s vital to support not just scare employees. Helping them deal with today’s bills and budgets first to get a plan for the future really helps people take the next step.
Not getting involved with a company scheme
In the UK, auto enrolment means almost all employers are or will soon be enrolling employees into their pension scheme, in which they will match employee contributions at a minimum level. Opting out of such a scheme – which employees do have the right to do – is not a great idea. Essentially, employer contributions mean free money put towards employee savings. Plus the employee benefits from tax relief. Sometimes just explaining the mechanism and exploring what else they would do with their contribution and how much it would “earn” elsewhere really helps employees understand WHY pensions can be good value.
Financial courses now available
One of the keys to helping employees is ensuring they have the knowledge that only comes through education. The above are just some of the common financial mistakes we see made. However, they are just the tip of the iceberg.
If you’d like to better educate your company’s employees in how they can prepare for the future, then our range of courses can help. We offer full and straightforward help on a wealth of topics. Pensions, certainly, but we also cover home ownership, tackling debt, family financial management and even how to plan for Christmas.
If you’d like to know more about how we can help your employees better manage their money, get in touch today.