When it comes to communicating to employees about pension scheme investing, Gary Douglas, finance director of new business agency Ingenuity, is of the firm belief that you must get the basics right first.
Ingenuity, which employs just under 80 people, has historically had quite a young staff body. Accordingly, pensions were not always at the forefront of people’s minds. In recent years, however, this has started to change a little.
Douglas explains: “There are people who have been with us for a few years and have more responsibilities, like children and mortgages. They are starting to think more about their pensions.”
While he is keen for him employees to engage with their pensions, there are a number of barriers Douglas struggles with.
Mid-level and senior people in the organisation may feel embarrassed to ask what they deem ‘stupid’ questions about their pension, while junior people could feel shy about taking up too much of Douglas’ time. Douglas is also wary about overstepping the line and giving anything which could be construed as financial advice.
Finally, he is conscious that employees’ pension contracts are direct agreements with Ingenuity’s pension provider, meaning he cannot intervene, even when he would like to; when the provider makes an administrative mistake, for example.
That said, Douglas is keen to get employees engaged. When people join Ingenuity, the payroll team talks to them about their pension and explains how they can get involved. Payroll explains that the money is invested in a medium-risk fund, and how they can switch into different options, depending on their risk appetite, but that they should take proper advice on that from an independent financial adviser (IFA).
Ingenuity is also looking into introducing new benefits, including paying for an IFA to come into the office on a regular basis. Employees will be able to book short appointments with the IFA.
“The IFA will hopefully help them to understand more about their finances, from pensions to student loans and mortgages,” Douglas explains.
“I don’t think the IFA would get involved in saying, ‘you should put your money in this fund or that fund’, but they might say, ‘I think you should put more money in your pension, or ‘your risk profile suggests you might want to phone your provider and look at some higher or lower risk investments.’”
Douglas concludes: “I want the IFA to educate people, not talk about the different funds. I hope they help people to feel a bit more relaxed about their life and stress less about what they don’t know.”