hr & hospitality bites 01 march
TRANSCRIPT
1 March 2017
Once a week insights, features and interviews for
HR professionals in hospitality
bites
Mind the Gap - Auto-Enrolment and the Pensions Shortfall
Mind the Gap
The research states that current contribution levels will result
in a massive savings gap and that if the UK government wants
savers to achieve these targets, contribution levels need to
rise dramatically.
Not good news if you fall into the ‘in-betweener’ category – an
entire generation aged 30-45 of people who are at a huge risk
of under-saving for retirement.
EMPLOYEE ENGAGEMENT
HR & HOSPITALITY BITES
“ For many, the
£200,000 - £250,000
pension pot is a distant
dream; the level of
monthly savings
required to get to that
target is simply
unsustainable for
most. "
FINANCIAL EDUCATION
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Earlier this month, pensions Minister
Richard Harrington revealed that he
has set a target for savers to
achieve a £250,000 pension pot by
the time they retire, however recent
research by Aviva shows that auto-
enrolment contributions would need
to rise significantly to enable savers
to achieve that target.
- Auto-Enrolment and the Pensions Shortfall
This generation will be hit particularly hard. The previous
generation enjoyed the benefits of funded pensions
provision and easier access to home ownership and the
generation after that have been introduced to auto-
enrolment at a much earlier stage in their working lives.
For many, the £200,000 - £250,000 pension pot is a
distant dream; the level of monthly savings required to
get to that target is simply unsustainable for most.
Even saving at 8%
for 40 years may
not be enough to
bridge the income
gap at retirement.
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Dale Critchley, pensions policy manager at Aviva, said "Next year we’ll see the first contribution rise
and in 2019 it will reach a total of 8%. When it reaches that point, those who have stayed in their
workplace pension scheme will be putting a reasonable amount into their pension pot. But, as our
figures show, even saving at 8% for 40 years may not be enough to bridge the income gap at
retirement."
And what about the people who have only
started saving since 2012 when auto-
enrolment was introduced? There are huge
numbers of employees who are faced with
having to sacrifice significant chunks of their
salary to make up for their pension shortfall or
extend their working life considerably to
make up for the years they were not saving.
Aviva recommended at the end of last year that auto-
enrolment levels be pushed up to 12.5% as the 8% levels
are “clearly inadequate”.
Ahead of the DWP’s auto-enrolment review, which will
investigate contribution levels, Aviva made its own
recommendations to the government at the end of last
year. The provider said the 8% levels were ‘clearly
inadequate’ and advocated pushing them up to 12.5%
by 2028. With the road ahead looking pretty bumpy in
terms of disposable income, value of Sterling and
increases in the cost of living post-Brexit, what can you
as an employer do to support your employees in tackling
the ticking timebomb of pensions and in finding a
savings balancing act that works for them, bearing in
mind that you’re also likely to be feeling the pinch.
FINANCIAL EDUCATION
CHANGING WORKFORCE
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As a result of the impact of various policies including
Auto-Enrolment, the National Living Wage and the
Apprenticeship Levy which will come into effect this
year, the pressure is on for employers, especially within
the hospitality industry to improve productivity. One
way of increasing pension contributions is of course
from the employer side, but is it then a case of robbing
Peter to pay Paul ie reducing other elements of the
employee reward package to boost employer
contributions?
FINANCIAL EDUCATION
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1. Social media at work
No more staring at a blank Outlook message
wondering how you can phrase ‘Can you please
just send me the info right now?’ in a slightly less
demanding way and proceeding to rattle off the
usual email niceties… We’re talking speed,
brevity and no more ‘Hope you had a lovely
weekend’… Quick and easy exchanges, saving
time, cutting down in email overload. Why
wouldn't you?
2. Social media at work
2. In an Instant
And what about the scale and cost of reviewing working practices and job design to pay for auto-
enrolment while we’re in the middle of the ‘perfect storm’ of policies which have significantly
increased our business costs? The pressure on the employer is huge at the moment, especially within
the hospitality industry. Good employers will have that sense of paternalism towards staff and want to
look after them in whatever way is right – it’s the most fundamental aspect of attracting, recruiting and
retaining the best talent and one of the most important ways that you as an employer can empower,
develop, motivate and support staff. Never has it been more important for employers to deliver
financial education in the workplace.
Education was the red thread that ran through our
findings. The future of corporate benefits and pensions
can be secured without the need for complex
strategies. It’s not rocket science.
Knowledge is power; and the survey shows clearly that
through positive communications for employees, staff
can be enabled to make smarter decisions for
themselves and their families.
DAM did some research into the future of employee benefits and found that
employers who empower staff with financial education are those that enjoy
higher benefit take up rates and improved staff retention.
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2. In an Instant
4. Spread the love
And as the retirement - and arguably health -
benefits from the state look set to wane, savvy
employers of choice have an opportunity and a duty
to recognise this need and reward their people with
not just what they want now, but what they need for
a lifetime.
Yes, the contributions you make as an employer are
hugely important, but the ‘why’ behind the ‘what’ in
terms of supporting employees with a long term
programme of advice and support is going to be
crucial to ensure their financial wellbeing and of
course, your productivity as an organisation.
A financial education programme should incorporate all benefits, including
employee assistance programmes, retail discounts and pensions and debt
management advice.
As an employer, you provide the primary source of income and with that comes
responsibility. Of course you won't be telling people how to spend their money, but
wouldn’t it be great if you could help to ease financial worry and help your teams get
the most out of their salary and of course working for you?
It’s not something that can be ‘got’ anywhere else and it will be one of your most
important recruitment and retention tools. A financial education programme can also
bring your corporate values and CSR strategy to life and set you apart from your
competitors.
Times are pretty hard right now, and probably going to get a lot harder, so the more
you can do to look after your employees’ financial wellbeing, the better your teams
will feel and that can only be a good thing for productivity.
Research in 2015 by Capita showed that 45% of employees would be willing to save more if they
had a better idea of how pensions worked.
It’s very unlikely that they’re going to go and find that information out for themselves so there’s a
clear opportunity for you provide support with that.
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2. In an Instant
4. Spread the love
DAM is delighted to be supporting the Caterer
HR Forum 2017 taking place in London this
April, a must attend for all HR professionals.
Topics will explore how to get your workforce ready for the challenges of Brexit, making the most of the apprenticeship levy, aligning customer and employee engagement and the conference will also
explore the tools of retention that will helpyou attract and keep the best talent.
We'll also be celebrating the Best Places to Work companies in hospitality 2017. www.hrforum.com