Thursday, 2 June 2016

Benefits that Drive Value

I met a Finance Director of a medium sized business recently. In our brief conversation, he made it clear he did not value the benefits his company provided to staff and saw them simply as an additional overhead.

If I’d had longer to talk, I’d have said more than I did. This is my follow up letter. (Not actually sent as I didn’t get his details!)



Dear Finance Director

It was good to meet you the other day.

I appreciate our conversation was a brief one, but if I’d had longer to chat, this is what I would have said….

I understand business is tough and from your point of view, additional benefits on top of salary are just overheads to be dealt with. But have you considered what you could do with those benefits at little extra cost to you?

Most employees don’t value their benefits either- mostly because employers don’t communicate them too well. I’m guessing that would include you- why communicate what you don’t value as a business manager? But the benefits all have value. The pension has matching employer contributions. That’s like free pay to your staff. Even the flexible holidays have a value, and the discounted affinity benefits have little cost to you but significant value to those who use them.

I guess I’m asking you to have another look at what you offer.  With the right communication, you can turn benefits from perceived business costs to providing a competitive edge for your company. Good benefits properly explained promote your business above and beyond your competitor who does not have those benefits- or does not bother communicating them. Small communication costs can provide a significant competitive edge, driven from staff wellbeing and a value well beyond the benefits themselves.

Benefits don’t have to be overheads. They can be your business case for future profitability.

Yours sincerely

Friday, 29 April 2016

The Reason for Wrong Decisions

Well done to Darren Philp of People's Pension for the excellent presentation at this week's Pension Age Conference. He spoke on reasons people make the wrong decisions. So with some commentary of my own,  here's hoping I was listening properly:

1. Present Bias
This is simply the feeling that I can have the money now, take it out, use it, not save it.

2. Ostrich Effect
Head in the sand and the pension decisions may go away.

3. Optimism Bias
I really won't need to save that much as what I have will bring in loads of interest. Alternatively... I really won't need much in retirement...

4. Complexity Aversion Bias
Too much choice! What to do? Nothing.

5. Bandwagon Effect
What's everyone else doing? That must be right....

6. Confirmation Effect
Can someone please confirm what's best for me? Just tell me what to do!

The solution to these issues lies in clear communication at a simple level, good 'defaults' and a good deal of persistence from the employer/provider!

Tuesday, 26 April 2016

Belonging

There's some good thinking from LCP on the Brexit issue this week. In the end it may not be to do with economics, but more to do with 'belonging'.

Do we want to be part of Europe or not? To be on the outside may not be the best place for us in the long term, even if in the short term, the financials are not so bad as they are sometimes portrayed.

I prefer belonging to pulling up metaphorical drawbridges, but as the LCP article suggests, there's a lot of emotion and hot air in this debate. The Churchill quote is apposite:  “A fanatic is one who can’t change his mind and won’t change the subject”.

Tuesday, 5 April 2016

Being Bold on the Benefits of Pensions

Helen Morrisey’s clarion call in Professional Pensions to be ‘bold on the benefits of pensions’ is welcome.

So often, as pension professionals, we get caught up in the minutiae of the pension issues and forget the big message. But the big message is a simple one and needs saying as frequently as possible. And as simply as possible.

On the bus tour linked to Pensions Awareness Day, nearly 600 people came onto the bus during the week. And what did they ask? Details as to how S2P is changing? No. How to maximise their AVCs? No. What investments will give the best return? No.

Their questions were simple (see previous blog):

      ‘What’s a state pension?’

      ‘Do I get any pension from the Government?’

      ‘Does my employer offer a pension?’

      ‘Do I have to offer a pension?’ (from an employer)

      ‘It’s all too complicated’

      ‘There’s too much choice’

      ‘Tell me what to do’

To quote Helen, ‘we need something simpler, cleverer and bolder’. Come on pensions communications companies- let’s be hearing from you!

Friday, 18 December 2015

Pension Awareness Day - Keeping it Simple

In September, the Pension Awareness Day bus travelled from Edinburgh to Manchester, to Leeds, to Birmingham, to London.
 

Over 600 people came on board during the week. Pension Wise were there, with different teams at each location. And the good people of Scottish Widows and People's Pension were on hand to help. Local radio broadcast us. Local newspapers interviewed us. An the pensions press supported us. (Thank you Pensions Insight and Professional Pensions for your encouragement.)

And what did those 600 people ask or say? Here's a sample:
‘What’s a state pension?’
‘Do I get any pension from the Government?’
‘Does my employer offer a pension?’
‘Do I have to offer a pension?’ (from an employer)
‘It’s all too complicated’
‘There’s too much choice’
‘Tell me what to do’
 
You don't get much more basic than that. For all our pensions knowledge, sophisticated communications and strange looking monsters courtesy of the Government, we still need to keep to the simple messages.

Thursday, 20 August 2015

Mirror.... Signal.... Manoeuvre...

Mirror... Signal.... Manoeuvre....  And off we go.

This years' Pension Awareness Day is gathering pace. And it's making even more of an impact as a bus is driven from Edinburgh to London via Leeds, Manchester and Birmingham.

The message is simple:  to promote the importance of saving for the future and to alert the nation that it is not saving enough for retirement.

If you're a pensions professional, a pensions company, or just plain interested in pensions, why not join us? It's not too late to sponsor the campaign. You get a lot of publicity - and more to the point, it's a strong altruistic statement that you care that the next generation has a pension!

Get on board! Here's the link: Pension Awareness Day.


Thursday, 9 July 2015

Osborne's Plan for Pension Poverty

George Osborne is in danger of single-handedly destroying the pensions industry.

First, the so called pension freedoms. I’m not sure his opposite numbers in the DWP knew it was coming. Definitely his initiative- and with unforeseen (or seen and discarded) consequences. By copying the Australian model, we are in danger of opening up the nation to ‘double dippers’ as Australia calls them. People that take their cash, miss-use it, or miss-calculate and end up dependent on the State to survive.

And now a consultation document considering scrapping tax relief on pensions. Throughout my 38 years in the pension industry, alongside company contributions, the one thing that ‘sells’ pensions to youngsters is the tax relief. If pensions get treated the same way as ISA’s, then ‘goodbye pensions’. The industry becomes a savings industry, and over time (with unforeseen consequences and/or an uncaring Government), people will find that they didn’t save enough and can’t live on what’s there in retirement.

Short term treasury gains are in danger of sending the next generation into retirement poverty.