How to engage your employees with their workplace pension

Written By Dan Mills

With more than 38% of people set to retire on savings that won’t even cover basic living costs[1], there’s clearly much work that needs to happen – both inside and outside of the workplace - to improve current retirement outcomes. But against a backdrop of government reform, changing regulations and evolving employee expectations, how can employers engage employees with their workplace pensions?

The good news is that 79% of employees say that they would like more support from their employer about planning for a financially comfortable retirement [2]. So, with a willing audience, the question is really how businesses position themselves as an employer of choice by delivering thoughtful, relevant and supportive communication and education.

1.      How to make your company pensions relevant to employees

2.      Key employer considerations: demographics, diversity, and workforce needs

3.      Trends and future developments in workplace pensions

4.      Communicating work based pensions effectively to employees

5.      Useful (free) pension tools

[1] Scottish Widows’ 2024 Retirement Report

[2] Aviva’s Working Lives Report 2023: Fit for Future 

1. How to make your company pension relevant to employees

One of the key challenges that employers face is how to make pensions relevant, and engage a broad demographic of employees in what has traditionally been thought of as a complicated subject. While the key to this will lie in tailoring your message to your specific workforce demographic, there are many ways that you can approach this, including:

Connect pensions to life-stages

It’s critical that pensions become a more normalised topic that is talked about and promoted to all age-groups within your workforce,  from the moment an employee is onboarded to the moment they leave, or retire.

Connecting promotion with life-stages can be an effective way of ensuring the message you’re delivering is relevant to your audience. For example:

  • Making Environmental Social Governance investments clear to younger workers to help boost engagement: 48% of workers aged 18-34 say that they would increase their workplace pension contributions if they knew their pension was investing in funds that aligned with their values and beliefs[1].

  • Promoting pension contribution matching (if you offer it) to parents – especially new mums – and educating on the financial impact of career breaks with real-life examples.

  • Ensuring carers in your workforce know about flexible working policies, or paid caregiver leave, can help employees manage caregiving responsibilities without dropping out of the workforce entirely and missing out on crucial pension payments.

  • When employees are given a pay increase, consider mentioning the benefits of increasing their pension contributions, or encouraging them to opt back in if they have opted out of a pension due to cost of living struggles.

  • Life-events such as marriage, divorce, or the birth of a child, are a good opportunity to ensure employees have registered or updated their pension beneficiaries so their pension, or part of, can be passed on to the right person in the event of the employee’s death.

Connecting messaging with your existing policies - such as flexible working or fertility – helps ensure you’re giving employees relevant messaging and signposting at key moments in their life.

Financial education around workplace pension contributions

51% of employees don’t know how much they pay into their work based pension each month and 53% admit to not knowing how much they have saved into their pension[4]. Never assume that your employees know their options regarding contributions, including the benefits of salary sacrifice and matched schemes.

Making sure that they know the basics is crucial. For example, do they know:

  • With salary sacrifice, they’ll potentially pay less tax because their tax will be calculated based on a lower amount of UK earnings?

  • For every £8 saved towards their pension, the government adds an extra £2 in tax savings (for basic-rate tax payers)?

  • Whether you offer to match their pension contributions and what difference this will make to their pension year-on-year?

Bringing these points to life with practical examples is always helpful. Digital tools, such as the Retirement Living Standards can help you achieve this by illustrating how much people will need to save to achieve a minimum, moderate or comfortable level of retirement.

Pensions as part of wider financial wellbeing initiatives

Re-integrating pensions into wider financial wellbeing initiatives could help to normalise the conversation and help employees to understand their pensions better as part of wider financial planning that might also include a private pension, a spouse’s pension, and the state pension.

While traditionally company pensions and pay were something that employees were actively discouraged from talking about, perhaps with the upcoming EU pay transparency directive – and the impact for UK companies with operations in the EU – we’ll start to see this trend reversed as employees feel more able to discuss this previously taboo subject.

Promoting long-term planning

From 2023, the majority of today’s workforce will have solely DC (Defined Contributions) pensions, which, unlike DB (Defined Benefits) pensions before them, puts responsibility for the employee’s financial futures firmly in their own hands. This means employees need to take a much more active interest to ensure the best possible result.

Education and support that looks at the long-term picture, brings retirement goals to life, and provides a plan for getting there, are invaluable in helping employees make informed decisions.

Using real-life models to show employees the effect of a consistent pension contribution over decades helps them see the power of compound interest. Equally, showing them the long-term ripple effect of a reduction or gap in workplace pension contributions can also be helpful.


[3] Pensions engagement research, WEALTH at work, March 2024

[4] Mintago pension research, 2024:  https://mintago.com/pension-retirement-planning/mintago-workplace-pensions-research

2. Key employer considerations: demographics, diversity, and workforce needs

Given the far-reaching impact of retirement adequacy - from recruitment and retention to employee wellbeing, and HR objectives - it's a crucial issue to tackle for the future success of your business. But what constitutes an effective plan and what are the trends you need to be aware of?

David Pugh Managing Partner ilumiti

"Employers need to think of workplace pensions not just as a regulatory requirement, but as a critical tool for attracting and retaining talent.

A well-designed pension scheme demonstrates a commitment to employee financial wellbeing, which can be a real differentiator in today's competitive job market”.

Here are some of the areas to be mindful of to ensure the education and support you offer caters to the diverse needs of today’s workforce:

Longer working lives

Increased life expectancy, rising pension ages and the decline of final salary pensions have reshaped the narrative around extended careers. Many employees want - and need - to work longer, in meaningful roles, so it’s important to be aware of the main issues facing later-life workers, including:

Decumulation (the process of converting pensions into retirement income) is a key issue for older employees. A wrong step at retirement could see an employee’s retirement income severely diminished, undoing all of the hard work and saving that has been done to ensure they reach retirement with an adequate savings pot. With almost half (49%) of employees aged between 50 and 59 not knowing how they will access their pension[5], lack of awareness around retirement income options is a very real issue.

The gap between the two pension systems is another issue for Gen X workers (now in their 40s and 50s). With some of this generation now in receipt of both DB and DC pensions, specific education on how they work – both together and separately - is key.

Generational differences

With up to five generations now in the workplace, it’s important to consider the issues each face and how this affects the messaging you use to engage them with their pension.

Younger workers are more likely to be grappling with student debt, childcare and schooling expenses, minimum auto-enrolment contributions, managing multiple pension pots, and low homeownership rates. They will likely be more focused on how they afford their current lifestyles, so providing education on the importance of long-term retirement planning is key.

With 48% of younger workers aged 18-34 saying that they would increase their contributions if they knew their pension was investing in funds that aligned with their values and beliefs[6], this could also be a good avenue to explore to engage this demographic.

Diversity and inclusion

Research shows that women retiring at 67 – the new UK state pension age from 2026 – will have saved an average of £69,000, compared with £205,000 for men[7]. This is a huge gap that could leave many female employees financial vulnerable in retirement

Career gaps, caring responsibilities (around 58% of the UK’s 6.5 million unpaid caregivers are female[8]), childcare costs and lower earnings all contribute to the disparity. Low income workers and ethnic minorities are also disproportionately affected and are less likely to have, or save into a workplace pension.

Consider what you can do to reduce inequities. Can you amend any of your existing policies or procedures - such as parental-leave pay, equitable career opportunities and flexible working policies – to make a difference? Education on and examples of the cumulative effect of lost pension contributions over time can also be powerful.

Potential flaws in the current system

When considering your approach to pensions and how you communicate to employees, it’s essential to take stock of the world we currently live in. The continuing impact of the cost of living crisis, people renting into old age, and issues around social care aren’t generally factored into retirement adequacy and will have an effect on different types of earners.

With 34% of UK adults feeling anxious about their financial circumstances, 29% feeling stressed and 41% choosing not to put the heating on in their homes[9], being mindful of and sensitive to these issues is critical.


[5] research by workplace pensions provider TPT Retirement Solutions, June 2024.

[6] Pensions engagement research, WEALTH at work, March 2024: https://www.wealthatwork.co.uk/corporate/2024/04/17/pensions-engagement-research-survey-results-2024/

[7] Pensions Policy Institute, The Underpensioned: Defining the Gender Pension Gap’. February 2024

[8] Carers UK

[9] Stress, anxiety and hopelessness over personal finances widespread across UK, Mental Health Foundation, Nov 2022

3. Trends and future developments in workplace pensions

Keeping an eye on pension developments will help ensure you’re ready to communicate any relevant changes to your employees in a timely fashion. Here are the main (2025/26) changes to be aware of. Your pension provider should be able to guide you with these changes and help you to remain compliant and responsive.

Sean Phillips Strategic Partnerships Director ilumiti

“The pensions landscape is constantly evolving, with new regulations, products, and technologies emerging all the time.

Strong partnerships with pension providers and industry experts are essential to staying ahead of the curve and ensuring that employers have access to the best possible solutions for their employees.”

National Insurance (NI) changes and salary sacrifice opportunities

While the changes to NI in April 2025 will raise employment costs for businesses, it does present an opportunity for employers to offset these additional costs by paying into their employees’ workplace pension via a salary sacrifice scheme.

This would reduce both the employer’s and employee’s NI liability as a result, leaving employers with a bigger pot of funds for other employee benefits.

Clear communication to employees ahead of the change will be key. Explain the opportunities that it presents and provide an explanation of the benefits of salary sacrifice schemes, including how it can improve their net pay and boost pension contributions. You should also highlight any possible disadvantages of salary sacrifice, such as the potential impact on the employee’s entitlement to certain benefits including statutory maternity pay.

Auto-enrolment updates: increasing minimum pension contributions

The government is expected to introduce higher minimum contribution rates in the coming years. It’s possible that minimum contributions (currently 8%) will move more in line with Australia (currently 11.5%, moving to 12% in April 2025).

If contribution increases are on the cards, it will be essential to communicate these changes to employees well in advance, stating why and when the changes are happening, the benefits to their pension pot in terms of financial security as well as what this may mean for their take-home pay.

Consultation for a new Value for Money (VFM) Framework

It is hoped that the proposed VFM framework will enable employers to better compare the value and performance between schemes when choosing where to automatically enrol their employees. It will place greater responsibility on employers to ensure their chosen workplace pension provider delivers strong outcomes for employees.

Take a look at the FCA website for more details: https://www.fca.org.uk/publications/consultation-papers/cp24-16-value-for-money-framework

The Government's pension reform plans

It will be important for employers to keep an eye on how pension reform progresses and what this means for their business and pension operations. Your pension provider should be able to help you keep abreast of these developments which include:

Creation of pension “megafunds”: In November 2024, the Chancellor announced plans to merge Local Government Pension Scheme (LGPS) assets and consolidate DC schemes into larger "megafunds." Find out more here: https://www.gov.uk/government/news/pension-megafunds-could-unlock-80-billion-of-investment-as-chancellor-takes-radical-action-to-drive-economic-growth?

Expansion of Collective Defined Contribution (CDC) schemes: The government is accelerating plans to broaden access to CDC schemes, which pool contributions from employees into larger funds managed by professional investors. Find out more here: https://www.gov.uk/government/news/millions-of-workers-to-benefit-from-modernised-new-pensions-system?

4. Communicating work-based pensions effectively to employees

Many employees are overwhelmed when they think about pensions. Their perception is that they are complicated, which is not helped by the complex jargon and acronyms used within the industry. While there have been huge improvements with the creation of digital tools and simplified language, there is much that can still be done to ensure employees take an active interest in their pension.

As one of your biggest expenses, it makes sense to ensure you’re actively promoting and educating employees about your pension scheme to ensure you remain an employer of choice and to help set them up for the most financially secure future possible.

Dan Mills Creative Director ilumiti

“To truly engage employees with their pensions, we need to move beyond generic information.

We need to segment our audience and tailor our communication to their specific needs and interests. This means understanding their life stage, financial goals, and preferred communication channels."

A Department for Work and Pensions (DWP) survey conducted in 2023[10] found that the following could help motivate people to engage with their pension:

  • ability to interpret what information about their pension meant for their future and what impact making changes could have

  • ability to influence their pension outcomes

  • understanding the benefits of engagement

  • ability to view information about their pension easily

Information in one place

Making sure your employees know where and how to find out about all aspects of their pension is one of the fundamental things to get right. This might include:

a) What they've currently got in their pension pot

As well as sending an annual statement, many pension providers have an online platform where employees can log on to see exactly how much they’ve saved to date. Make sure employees know who their workplace pension provider is and how they can access the online platform.

Don’t forget that the state pension isn’t included in this, so it can be helpful to provide basic information around this, such as:

  • when they are eligible: currently it’s 66 and due to rise to 67 between 2026-2028

  • if they’ve paid enough in NI contributions to qualify: they will need to have paid between 10 and 35 years’ NI to qualify for the state pension.

  • how much they’re likely to get: this will depend on the number of years’ NI contributions. The full rate of the state pension in 2024/25 is £221.20 per week (£11,502.40 per year)

  • how they can top it up if they’ve missed years. This one’s important to flag to any employees who may have gaps in their contribution record, such as due to sickness, raising children, or caring for elderly relatives as it may be possible to get National Insurance credits. They can check here: https://www.gov.uk/check-national-insurance-record

b) If they've got any old pension plans from previous employers

With people joining different employers throughout their career, they can end up with multiple pension pots that can be easy to lose track of. With an estimated £27bn in lost pensions, finding a lost pension could make a big difference.  Letting employees know how they can find out if they have any old pensions is easy, simply signpost them to https://www.gov.uk/find-pension-contact-details

The much-awaited introduction of pensions dashboards - from 2026 - will help employees keep track of accrued pensions savings much more easily. And with Generation Z expected to change jobs every two years, this advancement could prove significant.

C) Actions they need to take between now and their retirement age for their ideal future

This one’s a bit more complicated as no one size fits all. As a basic first step, you could ensure that all employees know the five main elements they have control over that can affect how much they receive, namely:

  • Time - how many years have they got to grow their pension pot before they retire.

  • Contributions - the more they can pay in, the bigger their end pot is likely to be. Letting employees know if you offer matching on their contributions is key.

  • Consistency – make sure they understand the power of compound interest. Estimates show that an employee who takes a five-year career break to care for a child or an adult dependent could lose out on as much as £50,000 in pension savings due to missed contributions and the lost potential for investment growth[11].

  • Performance – the interplay between risk and growth (and education) to get the maximum out of the pension.

  • Charges - high charges can eat away at your pot, a consideration if employees have multiple pots and are looking to consolidate them.

Your pension provider should be able to provide you with tools – such as forecasting, models, information on investment growth concepts and comms - to help you educate and inform employees about their pension. There are also several free tools that you can signpost your employees to.

If your budget allows, consider providing financial advice (many pension providers offer this as an additional service). This can be especially useful to those nearing retirement to ensure they don’t fall foul of poor decumulation, undoing all the saving they’ve done during their working years.

Raising awareness via regular promotion

While you are au-fait with the workplace pension you offer, chances are that your employees will be less so. Regular, relevant and timely communication is the key to ensuring your employees know about, engage with and value it.

In an ideal world, your pension comms strategy would include up-front research, objectives, segmented audiences, multichannel content and measurable targets. Look at our guide to communicating pensions & benefits to employees for a full run down.

If your budget, expertise or time won’t stretch to this, as a minimum you should aim to keep your messaging simple and jargon-free, regularly repeat messages to normalise pensions and, where possible, create nudges at key life stages, or to tie in with the many national awareness days around pensions, including:

  • Pensions Awareness Week: usually run during September

  • Talk Money Week - usually run during November

  • Pension Engagement Season (PES) – usually from September to November,

  • National Pension Tracing Day - usually run during October

Using communication channels to reach all your employees

Your employees will have different preferences when it comes to consuming and understanding information - some may prefer detailed documents or emails, while others engage better with bite-sized content on social media, or videos. By using a variety of channels and formats, you ensure your message reaches a broader audience and is sensitive to different learning styles.

A multi-channel approach also:

  • increases the likelihood of capturing attention and reinforcing key messages through repetition across platforms

  • helps ensure you reach your employees regardless of their working patterns and whether they are mainly on or offline.

If you’re unsure what selection of channels and formats would work best for your employees, conducting a quick survey can help guide your plans.

Bringing pensions to life for all employees

Regardless of the demographic, the key to successful pension communication lies in making pensions feel relevant to the individual. Providing practical tools, like personalised pension projections and calculators, can help employees understand the impact of their contributions on future retirement outcomes. Offering access to financial education resources - through workshops, webinars, or online courses - empowers employees to make informed decisions.

The role of technology in pension education

No doubt one of the greatest tools that employers have at their disposal when it comes to creating personalised pension comms is data.

By analysing workforce demographics - such as age, gender, and career stage - you can tailor messages to address specific concerns, from retirement readiness for older employees to long-term savings strategies for younger workers.

Using data from your pension provider could help you gain insights into how employees are interacting with their pension scheme, allowing you to spot and react to any trends such as poor engagement levels, or even missing beneficiary details.

The development of AI could be particularly useful for strategies aimed at increased segmentation, and advances in technology will aid the simplification of pension administration.

Natasha Newby Employee Benefits Director ilumiti

“Technology is transforming the way we manage and administer pensions. By leveraging data and automation, we can streamline processes, personalise communications, and provide employees with the tools and insights they need to make informed decisions about their retirement savings.”


[10] https://www.gov.uk/government/publications/understanding-member-engagement-with-workplace-pensions/understanding-member-engagement-with-workplace-pensions

[11] PensionBee, 2024

5. Useful (free) pension tools that you can signpost your employees toward

 

 

  • Living standards: https://www.retirementlivingstandards.org.uk/ The Retirement Living Standards, based on independent research by Loughborough University, have been developed to help you picture what kind of lifestyle you could have in retirement.

 

 

  • Personalised dashboards (coming soon – 360 view of pension pots and the ability to track and consolidate pensions). Implementation by October 2026

 

  • Free 1:1 government impartial guidance for pension savers:

o   For those under age 50: MoneyHelper https://www.moneyhelper.org.uk/en/pensions-and-retirement

o   For those aged 50 or over: Pension Wise https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise[NM1] [GS2] 

 

Please Note: A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can down as well as up which would have an impact on the level of pension benefits available.  Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. You should seek advice to understand your options at retirement.

To make navigating the maze of employee benefits even easier, consider partnering with an experienced consultant who can provide expert guidance and support every step of the way, as highlighted in our article "How to Select the Right Employee Benefits Consultancy for Your Business."

Please Note: The above is for information and does not constitute advice. Tax legislation is subject to change. The ‘Financial Conduct Authority does not regulate tax advice and some parts of the auto-enrolment process.

Need a helping hand? ilumiti is here to support you.

We understand the challenges HR professionals face in designing and managing benefits programmes. Our team of experts can provide guidance, support, and innovative solutions tailored to your specific needs. Contact us today to learn more about how we can help you create a benefits strategy that truly empowers your workforce.

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Dan Mills
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