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New data analytics can improve your employees’ financial wellbeing

New data analytics can improve your employees’ financial wellbeing

28 May 2021

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At a glance

There is increasing awareness that employees may not understand or value the defined contribution (DC) benefits that employers provide for retirement

Some individuals are not saving enough, or have other priorities (e.g. repaying debt), and some employers have limited scope to increase DC contributions

Employers are looking to identify how much their employees are saving and whether it is enough

A data driven approach can then be used to understand employees’ financial wellbeing, views and behaviours

Together, these help tailor DC objectives, employee engagement strategy and support, and investment options. This improves employee understanding and the value they attach to their DC pension

This helps employers with trust-based schemes to meet their regulatory requirements to consider employee preferences and financial needs

Understanding employees’ pension savings

The illustration below compares the savings needed at retirement to achieve certain living standards to the savings an employee is expected to have.

Employee 1 is not expected to have enough at retirement to meet even minimum living standards. Employee 2 will have a number of options to achieve a comfortable retirement. When analysed for all employees, actions can be targeted at cohorts of employees in similar situations.

Actions employers can take

1. Evaluate your employees’ DC pension outcomes against retirement living standards.

2. Use interactive modelling to see how you can help improve your employees’ pension benefits.

3. Use demographic data to gain insights into employees’ views, financial pressures, spending patterns, and communication preferences.

4. Engage with your employees to improve their financial wellbeing.

For further information, please get in touch with Jim Heal or speak to your usual XPS Pensions contact.