Recent research carried out by Standard Life reveals that Generation Y, or the millennials, are more financially savvy than employers may realise. We report on how employers can best use this insight to encourage millennial staff to engage with their pension benefit.
It can be tempting to view Generation Y, or the millennials, as a uniform group, and to approach them as one single market segment.
There’s also a perception that when it comes to finances, millennials (18-35 year-olds) can be somewhat reckless and wasteful.
To uncover the truth about Generation Y’s attitude to their financial wellbeing, Standard Life joined forces with financial researchers Explain the Market. The final report, Supporting the ‘sensible saver’ generation: a new vison for helping millennials create strong financial futures, reveals more diversity among Generation Y than might be expected.
The overriding theme from the findings is that millennials are far more financially savvy than perhaps thought and the key conclusion is that millennials are young but sensible savers. Highlights include how:
- over 80% of millennials describe themselves as sensible savers
- 36% of millennials said they intend to make a start on savings and investing in 2019.
What’s more, the research shows that millennials:
- are open to more information about life savings
- have the right skills to create a financially successful future
- are more trusting of financial services than the over-35s
- are actively looking for more help to plan for later life.
Although our research highlights that paying off bills and student debt remain a barrier to saving, financial wellness in the future is most definitely on a millennial’s radar and this generation is receptive to information on the subject. This offers employers a golden opportunity to empower Generation Y to save more for their retirement.
Without doubt, the introduction of auto-enrolment only seven years ago has been a game changer in terms of the number of millennials who are now part of a workplace scheme. It’s therefore vital that employers continue to find ways to reach out to Generation Y to appreciate the value of the pension benefit they have been automatically enrolled into, especially since minimum employee pension contributions rose to 5 per cent of salary from April 6 this year, with employers’ minimum contributions rising to 3 per cent of salary to make a total of 8 per cent.
The Association of British Insurers has already taken the initiative and recently launched a campaign targeted at Generation Y to ‘love their pension’ in order to reduce the chances of them opting out of their workplace schemes.
Millennials are looking for some straight talking around pensions
One other piece of key insight from our research findings is that millennials are looking for honest and realistic messages about saving for their future and the steps they have to take to provide for their retirement.
To better engage Generation Y staff with their pension benefit, the research indicates that employers should provide information and support using straight talking and engaging content. As a starting point, employers should:
- explain the basics about pensions such as the amount they contribute to the millennial’s pension and the pension provider it’s held with
- point millennials in the right direction for learning more about their pension fund and provider
- use technology to improve communication and make saving for retirement exciting, relevant and fun to meet Generation Y’s tech expectations.
Provide information and support with Standard Life’s ready-to-go campaigns
For employers who are members of Standard Life’s Workplace scheme, there is a raft of support to help engage millennials with their pension benefit.
Our ‘ready-to-go’ campaigns are kits which equip employers with communication materials that cover all the main parts of workplace pensions with meaningful and relevant messaging to reflect employees’ lives.
These ready-to-go campaigns offer a simple and effective method to allow employers to:
- increase awareness among millennials of their pension benefit
- encourage millennials to make the most of their pension
- support millennials to help create the retirement they would like.
Technology can help get the messages across
As part of the tech-savvy generation, Generation Y expects digital innovation when it comes to dealing with their savings.
A Standard Life workplace scheme offers online servicing and millennials can easily register to review and manage their pension online. They can check how their pension plan has performed, request a retirement illustration, top up payments into their pension and more.
Millennials also have the option to download the Standard Life app on their smartphones to help them engage with their pension benefit even more easily.
Encourage Generation Y savers to set money aside for later use
Far from being reckless and wasteful around their finances, millennials want to create strong financial futures and make savings’ decisions based on the information employers are able to provide them with about their retirement.
With well thought-out pension guidance having a demonstrable impact on a millennial’s job satisfaction and a firm’s own bottom line by improving productivity, attraction and retention, it is in everyone’s best interest for employers to actively promote the value of the pension benefit with their Generation Y employees.
To find out more about Standard Life’s ready-to-go campaigns, go here.
To read more on the findings of Supporting the ‘sensible saver’ generation: a new vison for helping millennials create strong financial futures,go here.
The views expressed in this blog should not be regarded as financial advice.
It’s important to remember that a pension is a long-term investment and as such its value can go down as well as up. It could even be worth less than was paid.