Maximising workplace pensions benefits

Justin Corliss: Hello everyone. Thanks very much for your time and for listening to this. Now my name's Justin Corliss. I'm joined today by my colleague Craig Muir. We're both part of the technical marketing team here at Royal London and today, we're going to look at workplace pensions and ways to maximize the benefit for all concerned, and I do mean all, because while our primary focus is to achieve the best possible outcomes for scheme members, we're also focused on getting the best possible outcome for employers. And, we're not forgetting that there are often financial advisers involved in the process, almost always, in fact, with Royal London schemes. So we also want to ensure that advisers derive benefit from both establishing the pension scheme initially, and also servicing it on an ongoing basis. Now this presentation is focused on defined contribution, or DC, workplace pension schemes. Rather than looking at any of the public sector or the few private sector defined benefit schemes, that get used for automatic enrolment. So, we are going to begin our session today by looking at what employers and employees value in defined contribution workplace pension schemes.

Now later in the session, we'll go beyond looking at what they value in the pension scheme itself and consider other relevant factors that contribute to the overall benefits package offered by the employer. We'll try to identify some key considerations when either selecting or reviewing a workplace pension scheme before drilling down into some ways of maximizing an individual's pension fund.

Now, we'll do that by paying pretty close attention to Pensions UK. That was formally PLSA or Pensions and Lifetime Savings Association, so the Pensions UK Retirement Living Standards, as these are an excellent tool for workplace pension clients who often won't receive face-to-face advice, that may be very open to guidance on their pension, especially if it's well-structured and, provided in a pretty easily digestible format for them.

Now we'll finish by focusing on employee engagement. Now everything that I'm hearing in the market at the moment suggests that there is a shortage of quality skilled employees and, therefore recruitment and retention are likely to be higher on the agenda for more employers than we might have seen in the past.

Employee benefits packages, including pensions are hugely important here, so we'll try to identify some good practice in this arena. So, quite a lot to get through. But of course, for this to be CPD-able, we need to have some learning objectives. So, by the end of this session, you'll be able to describe ways to maximize workplace pension accumulation, explain strategies to achieve best member outcomes, and identify different methods of employee engagement in workplace pensions.

Okay, let's start by getting straight to the crux of the issue. Workplace pensions are basically an employee benefit it's now compulsory for employers to provide. Now, given this, it's hardly surprising that more and more employers are keen to maximize the benefit they get from this monetary outlay that they have to make.

Part of maximizing the benefit involves ensuring that employees are aware of the benefits being provided, that they value the benefits being provided, and that this awareness and perceived value is broadly spread across the workforce. So, let's begin by acknowledging where we're at. Now in the 2024 Royal London Workplace Pension Survey, only 29% of employees said that they knew they were saving what they need for their retirement.

A whopping 71% either don't know if they're saving enough or knew that they weren't saving enough. And this is a considerable survey of, 4,000 workplace employees, quite a robust sample group there. And do you know what, if you are 23 and retirement's likely to be whatever, 45 years off for you, I kind of get that.

But I also know that starting or at least not opting out in your early twenties is vital to securing a comfortable retirement. So we need to find a solution. If we can't make them love it, we at least need to find compelling reasons for them to do it anyway. Particularly important given the current cost of living crisis and the danger that more people, may consider opting out.

Now we also need to think of other ways to recruit and retain staff other than pensions, and we'll talk more about that towards the end of the presentation. Moving to the centre block there, 40% of workers surveyed in the 2024 Drewberry Workplace Pensions survey, said that they don't really understand how tax relief on their workplace pension works.

Now, if you work in pensions, that's both hard to fathom, but also really easy to overlook. These people need help. They're not likely to get face-to-face advice, we need to find an effective way to get this information to them. But do you know, the final point here provides some hope. Over on our right-hand side there.

66% of employees would like some help to better understand if they're saving enough for retirement, and employers supported by financial advisers are ideally placed to provide this help. We spend a lot of time trying to find ways to recruit and retain quality staff. So anytime we get thrown a bone like this employee’s saying “this is what we'd really like.” We should sit up and take notice.

Now it's also interesting to see what your peers in the advice industry say a scheme absolutely needs to have. Now this is from Corporate Advisors 2024 Workplace Pensions into Retirement Report and considers the functionality the scheme needs to have to meet the needs of the employees: Partial tax-free cash withdrawals, flexi access drawdown, partial un-crystallised fund pension, lump sum withdrawal, and drip feed drawdown as seen by advisers as core functionality requirements for workplace pensions. And most providers offer either all or some of these options. Now, most contract-based workplace pension schemes (what we'd previously have called, a group personal pension).

We'll offer all of these, but that's not the case with every master trust. As you can see from this report that two of the largest master trusts now pensions and Nest have limited at retirement functionality. Now, I'm not trying to bash master trusts here. That is just simply not the case, it's definitely worth checking the at retirement functionality of any workplace pension solution that you are considering as this is what your peers are saying is really important.

Okay. And when we look at what's important to employers, it seems that this is changing too, even just over the last couple of years. It's the sort of middle two or the two tallest, charts or bars in the bar chart that I'm focused on here. The most popular approach is for schemes to align the pension offering with competitors.

Okay. You can see there representing 42%, ahead of offering a pension designed to deliver sufficient funds for employees to be able to retire at a reasonable age. And that's the one to the right of it at 36%. Now, this is somewhat of a backward step from AON’s previous research in 2022, which for the first time found that the most popular response was to offer a pension, aiming to provide sufficient income.

Okay, and that was, 46% in 2022 compared to 28%, aiming to align with, the competitors, in 2020. Now, interestingly, there's a large divergence of views depending on the role of the respondent. 64% of HR and benefit managers say their aim is to match the pension of competitors compared to only 31% of trustees and 40% of pension managers does suggest just a little bit of a disconnect in objectives between different stakeholders involved.

14% or one in seven if you prefer respondents say they aim to provide a market leading benefit, showing there are employers and pension schemes who are pushing the boundaries for others to follow. Now just 4% say they do the bare minimum, seeing pensions really as a hygiene factor rather than, as a valuable benefit, for employees.

Now, although I don't have it up here, what we know from research into Workplace Pensions is that around two thirds of employers don't know the likely outcome for a lifetime member of their scheme. So, while we do seem to be moving in the right direction and purpose is, increasingly driving behaviour, I don't think anyone could say we've reached where we want to be just yet.

What I am confident in saying though, is that by any measure, and based on any statistics I've seen regarding workplace pensions, 3% employer plus 5% employee is not likely to be enough for most people, okay. The common figure that we tend to see bandied about is at least 12% in total. And of course, even that depends on when you start on, when you start your saving journey.

I think it's safe to say that most people would benefit from paying more. Okay, so just before we go on and look at some aspects of workplace pensions in a little bit more detail, let's look at some of the key points that you might want to raise with employers when discussing the suitability of their existing workplace pension arrangement.

So, our first point there is how well does the scheme help members achieve their retirement goals? Now, is there guidance around how much they'll need to save the retirement they expect, or on other aspects of financial wellbeing so that they're actually in a position to allocate funds to that long-term saving?

Is the default investment option suitable for the employer's workforce? Now, that is huge, as around about 95% of workplace pension scheme members sit in the default option. It needs to be robust and transparent. It needs to cater for the whole workforce. Now overlay that with environmental and social and governance considerations, ESG considerations and the need for sharia compliant funds, you can see that this is an issue that will grow and grow as time passes.

Does the scheme work as a tool to attract and retain the best employees? Is it giving employees what they want and need or is it just ticking the box. Now I think this is a huge point. Workplace pensions are a significant financial outlay for employers. It would seem to make sense for them to gain some advantage from that outlay where possible.

The next point that there is what retirement options are available. we've just seen that advisers feel there are certain things a workplace pension scheme needs to have. Pension freedoms were a bit of a game changer for defined contribution pensions. I don't think it's unreasonable for employees to expect all this functionality will be available within their scheme, but of course we know that's not always the case.

And then the last one we've got there is is the scheme as cost effective as possible. And I do mean cost effective, not just cheap. Nobody wants to pay more for something than they have to, but due to that 0.75% charge cap on workplace pension default funds, pricing differentials can be quite small. Remember, a scheme with an annual management charge of 0.5% that does everything that the employer and the workforce need it to do at no additional cost (and I include a broad focus on employee wellbeing here), and we compare all of that to a scheme, which does very little, but for a slightly lower annual management charge, let's say at 0.45. That differential is only pushing the cost for a client with 50,000 pounds in their fund up by 25 pounds per annum.

What I'm driving at there is let's make sure that we are focusing on value rather than just on price. Okay. What I'm going to do now is hand over to Craig to take you through the next section of the presentation.

Craig Muir: Okay, thanks Justin. Now I want to think about how we can achieve the best possible outcome for pension scheme members and something that can really help with this is Pensions UK, as Justin said previously, it was the pension Lifetime Savings Association or the PLSA, their retirement living standards. For many workplace pension members, the million-pound question is, how much should I be saving into a pension? Although you'd be pleased to hear that for most people, it isn't a million-pound answer, is it?

But the answer's more complicated than most people think. Therefore, the challenge is to be able to simplify that answer to a point. People can grasp it and run with it. The ideal process may be to carry out income and expenditure analysis, which can then form the basis for a realistic discussion around expenses that will still be present in retirement, and that in turn should lead to the retirement income needed.

Now assuming for a moment the client has no defined benefit pension, you'd then calculate the defined contribution lump sum needed to produce a sustainable income equal to their retirement income needs. And you'd also, you'd build in the role estate pension plays because for many people it's likely to be the biggest source of income in retirement.

That's all well and good for advice clients who have an advisor to map this out for them, that help them to understand the amounts needed to achieve it. But there are two key things we know we need to consider in this discussion. First, we know that most people, especially those in workplace pension schemes, don't have the benefit of face-to-face advice to help them with this.

And the second point we need to appreciate is that many non-advised people struggle with this. Even that first step of working out the income needed in retirement may be a bridge too far for some people, and for too many of them, it's just too hard so they just don't think about it. Now one potential solution to this, or at the very least, something to ease the problem are Pensions, UK Retirement living standard figures.

As these can remove the first step by giving an indicative retirement income need, there's that better than a bespoke plan for the individual. No, of course it's not. Is it better than nothing though? Yes, it definitely is. In June 2025, pensions UK recalculated the required values in the retirement living standards just to reflect the current market and the impact of inflation, and it's these updated figures you can see here.

Now just as a reminder, they created these living standards to help people picture what kind of lifestyle they could have in retirement. And the standards show what life and retirement looks like at three different levels, minimum, moderate, and comfortable living, which you can see along the top. And what a range of common goods and services would cost for each level, which you can see underneath.

Then they further split this down into values for one person and two person households, and also for living in or outside of London. Now what you're looking at here are the figures for two person households who live outside London. And I think the power of these retirement living standards lies in giving people a real sense of their likely expenses in retirement and therefore the likely level of income needed.

So, you know they're particularly useful for members of the workplace schemes you manage, who are, they're less likely to get face-to-face advice. But these members do need some kind of guidance to make the most of their pension saving. Now, here's the equivalent figures for one person households outside of London, it’s just for your reference. Okay. Right. What I've done here is I've put all amounts into the table so you can see the equivalent figures for inside and outside London for one person households. Now we don't have time to look at all of them, so I'm going to focus on moderate outside London, which pensions UK estimate will require an annual income of £31,700.

Now, hopefully the clients will receive the full new state pension. Of course, you can get them to check how much they're likely to receive using the government state pension forecasting tool on the government's website. Now, in 2025-26, the full new state pension is £12,014.12. Now, you might not recognize that figure because you'll see £11,976, I think it is everywhere.

But unfortunately, that is not the correct figure. The correct figure is £12,014.12, and you might even have clients coming to you saying, I've had a state pension forecast, and it's telling me it's £12,014.12, and I'll explain why. Because what you do is you arrive at this figure by taking the weekly rate, which is £230.25, you divide that by seven, which equals £32.89, and then you multiply it, not by 365, to get an annual amount, no, by 365.25, and that's to account for leap years, and that's how you end up at £12,014.12. Right, so we've got the state pension figure. You can now work out what the shortfall is by take the state pension amount off, which is what I've done here. So the shortfall is £19, 685.88.

But you know, even if your average Joe or Joanne can identify their term income shortfall level, I'm not so sure they know how to solve it. So let's see how we can simplify that part for them too. To keep this as straightforward as possible, we've converted the shortfall and annual income (that £19,685.88) to a lump sum by dividing it by 5.601.

But that was the best annuity rate we could find for a single person, 66 years of age, escalating by 3% per annum to give some inflation protection with a five-year guarantee. Now, obviously you can use a different figure if you feel that'd work better, but we're really just looking for an indicative figure at this stage.

So this will suffice. So I'm just wondering if this is something that, you could create to go on a scheme website or something similar because it gives further meaning to pensions UK figures for employees who as, we've both mentioned before, are less likely to be getting face-to-face bespoke advice.

Guidance is absolutely critical for these people so anything you can do to simplify things and enhance their understanding will be hugely beneficial. So if we use that annuity rate, then someone living outside London who will receive the full new state pension, so looking for a moderate-income level in retirement, needs to amass a pension pot of, £436,857 in today's terms to achieve this.

To financial advisers and probably most people who work in financial services, a pension pot of £437,000ish sounds like a pretty decent pot. But we also need to bear in mind that the median pension pot is 65, is around £81,000 so clearly many people aren't getting anywhere near this figure.

What I want to do over the next few minutes is to outline a few simple messages that might show some of those non-advised clients or these guided clients, some ways to make this more achievable. These points will also be of interest to employers who really see the employee benefit package, and obviously the pension will be a major part of this, as not just something to pay lip service to, but a vital tool to attract and retain talent.

And I guess the easiest way to do this is to use a case study. So, let's meet Jane. Jane's 32 years old, lives in Birmingham, just started a job earning the median salary for a full-time UK adult, which is roughly 35,000 pounds per annum. Now, Jane did work for a number of years after finishing an apprenticeship, but she's just re-entering the workforce after a 12-year break raising a young child.

Now that her child's in high school, she's returned to work and has been automatically enrolled into a workplace pension scheme. And this is, this has got Jane thinking about her retirement provision. Now, automatic enrolment wasn't in place when she last worked, so she currently has no private pension at all.

Although she did receive national insurance credits for the time she was raising her child, so she's on track for that full new state pension. Now, ideally, she'd like to retire at age 67, her state pension age. Actually, that's probably not true, is it? Ideally, she'd like to retire at 32 to a large mansion overlooking the water in Monaco, but as she understands, there's a chance she won't win the Euro millions before her next birthday she'd like to create a plan to retire at 67. The welcome pack for her employer's workplace pension scheme makes reference to pensions UK's retirement living standards. And having looked at these, she feels that the moderate level outside London is most suitable for her. From further investigation of her workplace pension website, she sees this is likely to require a pension pot for around £437,000. But she doesn't really know what's required to get there. Seems like a huge amount to save up and her first instinct is to simply divide that 437 out, 437,000 by the 420 months, so that's 35 years until she's 67. That suggestion is to make a pension contribution of around £1,040 pounds a month, and that just doesn't seem affordable at all.

Of course, we all know it won't really be that figure is, as it doesn't factor in any growth in the funds tax relief for employer contribution, but I'm not sure that'll be immediately apparent to everyone in Jane's situation. So what guidance could Jane get possibly from her employer's workplace website to make this seem more achievable?

Because at the moment, it seems hopeless to her and she's getting ready to give up and not bother doing anything at all, possibly even opting out of said pension, saving altogether. And aside from that being likely to produce a poor outcome for Jane, it's bad news for her employer too. If an employee doesn't avail themselves of any of the employee benefits on offer, then retaining them often becomes a salary race, and that's a hard and costly race to keep winning.

So the first thing to highlight, and not just to Jane, but to all pension savers is to start early. Ideally we’d have some sort of cost of delay, calculator or illustration on the website. I'm not going to labour this point too heavily because one of the key features of automatic enrolment is that people are automatically enrolled from age 22, and then they need to opt out if they don't want to participate.

So, these days, most people do start quite early, and the reality is there wasn't really an option for Jane to start any earlier than she has. And there'll be many people in a similar position to Jane, but advisors do have a role to play with guidance here. Firstly, dissuading younger employees from opting out.

Now we probably all use the phase that the first pound saved as the one that grows the most. The earlier that first pound is paid, the better. Second, encouraging younger employees to opt in with their employer offers because if they opt in, the employer needs to make a contribution as well. For all but the very lowest earners, you know the entitled workers and a lot of misnomers that is given, they're entitled to very little.

In fact, one of the key points from the 2017 automatic enrolment review was reducing minimum age to be an eligible job holder from 22 to 18. But I'll talk a bit more about that later. And finally, and this is not really an automatic enrolment point, but does tie in with starting pension saving early.

If any of your clients are in the fortunate position, have been able to make a pension contribution for someone else - perhaps children or grandchildren, this could have multiple benefits. Even when £3,600 per annum gross paid from birthday age 18 on behalf of a child at 5% net growth rate, the fund would be over 1 million pounds at age 65 before any contributions the member makes themselves.

And you know what, I'd imagine that’d see you into nicer nursing home, wouldn’t it? Anyway, back to our main point, the table on the right there, crudely, shows a benefit of starting 10 years earlier. And as you can see, it's quite significant. It shows the different fund values Jane would achieve starting now and saving till 67, compared to delaying or start for another 10 years.

It's 370,000 compared to 231,000. That's a 60% reduction by the way now. 60% of the total by the way. So while I appreciate, we can't pop Jane in a time machine and go back 10 years, and we also need to ensure she starts saving today and doesn't put it off for another 10 years. The next point to raise is around employer contribution matching.

When your employer pays into your pension, it's free money, and there are very few instances where it is not a good idea to take it. Obviously, this is something advisers need to discuss with an employer clients, there's not every employer will want to do this, and even for those that do, there's likely to be a limit.

However, if the employer wants to attract and retain talent and want to have a better offering for their employees to have a good retirement fund, you might need to highlight the massive difference employer matching can make. And this graph makes it very obvious what the difference is between Jane simply contributing automatic enrolment minimums, which is the purple line at the bottom that amounts to approximately £370,000 over 35 years.

Versus 8% matching over the next 35 years. The green line at the top produces just shy of 740,000 pounds over the same timeframe - a significantly different outcome for Jane. And findings from the 2024 A on DC pension survey ‘Five Steps to Better Workplace Pensions’ shows this isn't pie in the sky stuff.

Given I've shown this in a pie chart, I think you'll agree that it's comedy gold right there. Anyway, the point is 58% of respondents said they partake an employer contribution matching. Now, that's pretty high, isn't it? We do have to temper that with the fact that a will look after larger employers, this might not be typical across the business community.

Now, having said that, smaller employers are still competing against larger employers to attract and retain the best talent, so it could still have some relevance. Okay, so we've considered starting earlier an employer contribution matching. The next point I want to touch on is using salary exchange. Now we actually do a bit of a deeper dive into salary exchange in another workplace pension presentation we have, and we also have a considerable amount of information about it on our technical central website.

So, I won't give you chapter and verse around how it works just now. Except to say using salary exchange can produce a bigger pot at normal retirement date than not using it. If you want further information on the detail of how it works, speak to your usual Royal London contact and ask them for our salary exchange guide.

Given the current concern around people opting out due to cost of living and also employer's concerns about the increase in their national insurance contributions from April 25, it's worth noting that salary exchange can be structured to increase employee take home pay, and at the same time, reduce employer costs.

But that's not what I've modelled here because I'm trying to show the fastest way to build up a pension, so I've assumed both the employee and employer national insurance savings are all redirected to Jane's pension pot. As you can see, over a 35-year term of doing this, the fund value and the 8% matching option is £781,000 if salary exchanges used and £740,000 if it isn't. Even if the employer won't play ball with contribution matching, but the employee still pays 8%, it’s a difference between £550,000 if salary exchange is used and £508,000 if it's not. Actually, for Jane over each contribution option, the projected fund value using salary exchange roughly matches the non-salary exchange pot, but one year earlier.

But do remember with salary exchange that it's really important to get payroll involved early to see how able they are to facilitate it. Because it saves a lot of hassle down the line when any limitations of payroll are identified early. Don't let that put you off though. I've known advisers who've struck salary exchange in such a way that saved employers thousands of pounds a year while still seeing more go into the employee's pension pot.

Even with all these helpful ideas, the fund value needed at NRD can look a bit daunting, perhaps even unachievable to some people, particularly at the start of their careers, when their earnings maybe aren't that high. And I think that the concept of escalating premiums is absolutely vital here because it can make it all seem a lot more manageable.

And there's two aspects of this I want to consider. The first is our first bullet point. If contributions are set as a percentage of salary, then a salary increases, so too does the pension contribution. While this will create a hedge against inflation, it doesn't change the fact that if you're following the automatic enrolment minimums and only paying 5% employee contribution, then although the pound figure of your contribution is increasing, you're still just paying 5% and quite frankly, as Justin already mentioned earlier, 5% probably won't be enough for most people. So this leads us onto the next part, increasing pension, pension contributions with pay rises. So for example, you might be earning £35,000 per annum and paying 5% of the salaries are pension contribution.

But when you get, say, a 3% pay rise, you increase your contribution rate to 6% of salary. Now this appeals to many people because you can often structure the increase. So, although your contribution rate increases from five to 6%, it coincides with a pay rise. So, your take home pay still increases. It's an area that I think advisers and employers can work together to really make a difference.

Because I suspect very few employees would genuinely do this unprompted. Something the advisers can do, which it might not seem that sexy, but could provide huge benefit to employees, is to help the employer with marketing materials around the time of pay reviews to promote the idea of increasing your pension contribution.

In fact, the House of Commons and their working pensions committee they produced a special report, a couple of years ago now, protecting pension savers, five years on from the pension freedoms. It came out in January 2023. It recommended that the government trial auto escalations schemes such as Save More Tomorrow, where people commit in advance to paying part of future salary increases into their pension.

This was a, with a view to understanding how the use of such schemes might be extended to a wider range of savers and employers. I guess here's a chance for employers to get ahead of the game, perhaps offer something their competitors don't, and of course, for you to show your expertise and that you're buying up to date with current thinking in the workplace pension market.

The graph shows the difference for Jane between paying 5% or 8% of salary over a 30-year period versus increasing it by 1% every five years. And in each instance, the difference is around 115,000 pounds over that 35-year period. As a final comparison before we move on, so if Jane sticks with automatic enrolment minimum, at, starting premium or I suppose you can call it, reduced take home pay for Jane of 107 pounds a month, it projects to 369,814 at age 67. That's, 67,000 pounds short of our target fund of £437,000 for a moderate income of £31,700 per annum. At the other end of the scale, if Jane pays the maximum 8%, that employer will match with salary exchange, and assuming that every five years she increases her contribution rate by 1% alongside a pay rise, the starting monthly premium, or again, the reduced take home pay is 171 pounds. nothing like the £1,040 she originally thought it might be. And that actually projects to 897,000 pounds at age 67. Clearly that's well over the £437,000 she was aiming for. And in fact, it's above the target for a comfortable retirement living standard of £43,900.

And actually now we know the difference between 5% and 8% contribution for Jane is around 64 pounds a month. Let's look at a final option and assume the employer won't play ball and sticks with their 3% contribution, but Jane still starts with 8% using salary exchange and increasing every five years. Now it projects to just shy of £666,000, which is, still well over the £437,000 she was looking for.

Although we do need to bear in mind that the retirement living standards are reviewed annually to reflect market conditions and have pretty much increased every year. So, perhaps a higher target is no bad thing. I think the important thing here is that this is within Jane's control, and it doesn't require any additional outlay from the employer.

So I hope this has helped demonstrate what Pension UK Retirement Living Standards can do, and why it's so important that we get this knowledge and understanding across to those in workplace pensions who are less likely to receive one-to-one advice and are absolutely reliant on this type of guidance to achieve their goals.

I know not every workplace pension client will be able to employ all of these measures, but as I hope I've demonstrated as I've gone along, each has merit. It would be great if you could implement each one, but the message needs to be to ensure you employ whatever means necessary, and these little nudges are all things that you, in conjunction with your employer clients can do to help clients achieve their goals.

In fact, explaining to employees like Jane, how using these simple options can make their contribution rates more affordable, can reduce their stress and improve their financial wellbeing. And just to finish this section off before we move on and look at employee engagement in a bit more detail, while significant strides forward have been made, one remaining hurdle is 65% of responding schemes don't know or don't identify the expected outcome for a lifetime member of their scheme, and that does make it difficult to measure your objective of improving member outcomes. So that's an area most schemes have some work to do, and what is encouraging is that pensions UK retirement living standards seem to be emerging as the primary tool for those that do assess or predict member outcomes. It might be worth considering whether the provider you're using or planning to use can help identify the expected outcome for the average member in the scheme or groups of members, as this makes it a lot easier to demonstrate lightly outcomes and therefore good value. Right I'm now going to pass you over to Justin to take you through the next part.

Justin Corliss: Thanks, Craig. Now as we've mentioned a few times already, employers are always trying to attract and retain the best talent. And clearly the pension scheme is a key part of achieving this. But as you know, virtually all employers have to provide pensions. Perhaps moving forward we're going to see the other non-pension benefits, which form a part of the overall workplace offering as just as significant, a differentiator, as the pension themselves are. And some of the figures here back up why employee wellbeing is so important to employers. These stats come from, Bippit’s Money at Work 2025 HR Report Now based on a survey of 2,000 UK employees and 500 senior HR professionals. It uncovers the gap between employees financial struggles and the support that they receive from employers.

Now, as you can see, 50% of employees say financial stress at work affects their focus, at work. Having anxieties around financial matters can be a pretty significant burden on employees' minds. Being preoccupied with financial concerns can result in, things like reduced efficiency, lack of concentration, and other health issues, potentially leading to workplace absences.

Now research by Aegon in 2024 has found that this is estimated to cost employers 10.3 billion pounds each year. Now this is a significant increase from the 6.2 billion, that it was, two years prior and is likely to be a side effect, possibly of a rise in cost of living. Now this means the average medium-sized company is likely to lose 37,000 pounds a year, which I'd imagine a good few of them can ill afford to do.

So the evidence is pretty compelling that having a happy and engaged workforce is beneficial both to the employees themselves and to the employer. But as we've already touched on, most employers have to provide pensions now. So, it's reasonable to assume, that, provision of workplace pension alone may not be enough to help employers attract and retain the best talent.

So, it's helpful to have a quick look at some of the other things employers may want to adopt to make working for them a more attractive proposition. So, I just want to spend a couple of minutes here looking at some of the things that could be included as part of an employee wellbeing package. The trick as we've mentioned already, is trying to find different things that will appeal to the breadth of the workforce and engage those that the pension might not reach. You don't want to just be re-engaging the same group over and over again - doesn't necessarily help your situation. Now as important as pensions are, if you are in your twenties and you've got 30 plus years before you can access it, then just not opting out of pension savings might be the best that we can hope for, for some people.

So, we need to find things that are relevant to their current life stage. And while, I've just given an example of younger clients, they're not the only ones who might be disengaged from pensions. So, if we begin at the top with the state pension now, we saw earlier how important the state pension is to most people in retirement.

But you know what, it's not well understood. A link to information on the state pension is likely to be useful to employees of all ages. Younger employees might be interested in how to claim National Insurance credits for periods they're off work. Perhaps with childcare duties, but people of all ages need links to the state pension forecasting tool, information on buying back missing years of National Insurance contributions, and how the new state pension interacts with the basic state pension, that sort of thing.

This could be a part of your employee wellbeing site. Moving clockwise around, the next one is quite similar, claiming benefits once again for younger clients, information around child benefit application and its importance for triggering entitlement to 12 years of National Insurance credits.

Could be very useful, but employees of any age might be dealing with a range of issues, either for themselves, or their loved ones. So guides on things like divorce, bereavement, what to look out for, any entitlements they may not be aware of. You could have guides on the importance of wills and power of attorneys.

The latter has increasing importance with an aging population, many of whom will have drawdown policies which require ongoing decisions to be made. As you can see, it's not always about claiming benefits for themselves, but sometimes being tasked for doing this for aging relatives on subjects that they might have little or absolutely no knowledge of.

So, there are a couple of ideas that really help employee engagement and wellbeing, but don't require much, if any, financial outlay from the employer. Moving around further to lifestyle perks, these are some of the more traditional benefits that are often available in larger workplaces, so here I'm talking about things like your cycle to work schemes, retail discounts.

I'm not going to spend a lot of time on that as information on this is pretty readily available if you search for it online, but it could also include things like season ticket travel loans if the employer is willing. Now our next point is around, protection and workplace pension protection policies.

Now, looking at some of the options that we've got on here. Okay. These findings from the survey, is from a survey of readers of Howden's, employee benefit from June 2024, and we see those main, group risk benefits in the proportion of employers offering them. Now, as you can see, third top there is group life assurance or group death in service, as you often hear it, called a whopping 79% of responding employers offer this to all staff. The first thing to say is, if you are an employer that doesn't offer this, they're significantly in the minority and that could be a risk to the recruitment and retention of their employees. Now, the other main point to consider here is how much, and that could be, a massive differentiator, especially for any employees who have underlying medical conditions which make obtaining private life assurance expensive or perhaps even impossible. There's often a free cover limit with group life claims, which is a limit, or a level below, which no underwriting is required. Now even for employees with no underlying medical conditions, an employer offering a death in service plan of eight times salary is likely to be more attractive than one offering two times salary. Now, if that's something that your employees value, it might be a relatively cost-effective way of improving your workplace wellbeing offering. Looking at some of the other options further down the list okay, and moving our focus here from those that do offer, some of these to employers that don't.

Take critical illness cover in the middle of the graph there. You can see that around 40% of employers that were surveyed there don't offer this. So, if your employer client does, then they're likely to be in front of the game with regard recruitment and retention. Now I'm not going to go through the rest, but one really important aspect.

To get the biggest bang for your buck here is to engage with the workforce to see which benefits they feel are most important to them. There is no one size fits all here, from an adviser viewpoint, of course, there is also an ongoing need to review many of these benefits on a regular basis, and often, might require a rebroke to a more suitable offering.

And of course, these things, can, generate remuneration for advisers as well. Back to the wheel of workplace wonder. I was going to go with the awe of occupational opportunity,clearly that would be ridiculous. We come here now to the financial health check and guidance.

Now, I have never really been convinced that AI advice will replace full financial advice with a living, breathing person. Certainly not at the moment anyway. People's financial individual circumstances are just too nuanced for it to work effectively. But for those people who are unlikely to receive bespoke financial advice, I think AI guidance absolutely has a place I can see huge benefits in a financial wellbeing site having access to a tool that takes clients list of questions. We touch on different aspects of the employee's financial wellbeing, highlights areas that need attention, and then proposes steps the employee could take to address those issues. I think that would be advantageous to employees and could promote engagement with their financial wellbeing.

It's just about touching on matters that are important to them at whatever stage of life they're in. Remember our stat earlier that showed more than half of employees surveyed would like some form of help from their employer to improve their financial situation. You know, we just need to bear that in mind, right?

If I'm not careful, I'm going to go off on a tangent and talk about this all day, but if you do want further detail on this, speak to your usual Royal London Business Development Manager. They'll be able to give you chapter and verse on this stuff. Anyway, onto our last point there, workplace savings.

Obviously the long-term savings box is ticked by the pension, which as we've discussed pretty much all employers have to provide. But what about a vehicle for shorter term savings goals? ISAs, for example, in a comprehensive package where artificial intelligence, guidance tools highlight gaps in employees’ financial wellbeing makes a lot of sense to have the solution included in the suite of products that the provider offers.

It can help establish good saving habits, for, for those employees and that tends to flow through to the rest of their, their financial wellbeing. Okay, so just a few ideas there, okay. Some of them, most of them in fact, don't necessarily have to involve a lot of financial outlay from the employer.

I really think that moving forward, the quality of all the extra parts around the pension might distinguish a great employer from an average one as much as the pension itself does. Now I've purposefully not gone into aspects such as, additional leave or flex working or carers leave and that sort of thing.

Now, while I think these things can be hugely beneficial as a recruitment and retention tool, they're a conversation for you advisers to be having with the employer. And of course, not all employers are going to be open to that. So yes, it is something to explore. Probably a little bit nuanced, for our discussion today though.

Okay. Howden's also asked, as you can see, what benefits do larger SMEs, plan to offer or change in the near future? Now, offering more flexible benefits is the biggest area of change, as you can see there at the top with 61% likely to introduce or increase coverage. Putting more focus on flexible benefits suggests that many large SMEs recognize that employees want or need choice.

Lifestyle and gym discounts are also high on the list of priorities, which also points towards enabling people to choose what's important for them. Okay. Something else that can really help with employee engagement is bespoke communication material. Now, although I really try not to get too Royal Londony in these presentations, can't very well show you what other providers have to offer can I? So yes, these are Royal London examples. I think there's different levels of branding for different scheme sizes. I'm not that close to that side of things. You'd need to speak to your usual Royal London, business development manager to get detail on that. But as you can see, it has the potential to really, create engagement and bring to life that that isn't just, you're not just a nameless number there, you are a part of that Royal London community, with branding on there as well. Now, perhaps the most powerful pension engagement tool though is the smartphone app. Okay. Now, in the Corporate Advisor round table document published in was a little while ago now, was May 2022. Research from Cushion found that 66% of people would engage more with their pension if it was delivered through an app once again.

I don't have much other option to show you the Royal London app, although not specifically my policy. Now as you can see, it enables the employees in the scheme to see what's been paid into their plan, where it's invested and how it's performing. Annual statements, what it could be worth in the future.

Our shows profit share. That's more to do with us being a mutual. They won't all need to have that; but you know it needs to be simple and straightforward to use and updated with new material on a regular basis. It needs to enable clients to carry out the most common tasks that they need to do, and to provide outputs that they understand.

The app can also be a link to the wellbeing site too, and in reality, today, if you want people to look at this stuff, and I'm not just talking about millennials and Gen Zs, I'm talking about, most baby boomers and anyone younger, you need to have it accessible via a smartphone app.

So just to finish this section, I just want a quick focus on management information, MI if you prefer. Now, a scheme governance report helps you to know how a scheme you are managing is performing, and it includes lots of useful information about the scheme as well as details about the individual members.

It's produced for you, the adviser, free of charge and designed to be used with the employer. Now, in truth, I include this not to show you how good the Royal London Scheme Governance Report is, although I do think you’ll agree when you see it, that it is very good. Instead, what I'm trying to demonstrate is the absolute importance of being able to get strong, consistent management information from whichever scheme you use for workplace pensions.

Employee engagement is important and clearly that's something we're trying to help you to promote in this presentation, but I'm also a realist and I appreciate that most people tend to engage with the pension side of all the things we've looked at today, more as they approach retirement. So, you need detailed management information on members approaching retirement, their fund value, their investment performance, and things like any transfers in to provide you with the information that you need to engage with members when they're ready to engage.

Okay, what I'm going to do now is I'm going to hand back over to Craig to take you through the rest of the presentation. But do you know what, I will just say, if you can't get something like this, and we're not the only ones that have, a scheme governance report like this, but plenty won't, then you need to ask yourself how you are going to gather the information that you need to engage effectively, with these clients.

But anyway, really back over to Craig now.

Craig Muir: Thanks Justin. Yeah, I just want to finish off by looking at some future considerations which are likely in the workplace pension space. I mentioned much earlier that one of the key points from the 2017 automatic enrolment review was reducing the minimum age to be ineligible job holder from 22 down to 18.

We had the pensions; it was called the Pensions extension of Automatic Enrolment Act 2023, and it gave the Secretary of State the power to reduce the lower in age limit for auto enrolment and remove the lower earnings limit for qualifying earnings so people would make auto enrolment contributions from the first pound of earnings.

Now, during the passage of the act, the conservative government confirmed its intention to reduce the lower age to 18 years. But following the 2024 election, the Labour government said in November 24, it would consider if and when to make changes to automatic enrolment, balancing the need for improved pension outcomes with the effects on business.

So although this has been given Royal Ascent, we don't actually have a date for these to be enacted.

Next thing I want to talk about, back in November 2024, the government produced a consultation considering consolidation in the workplace pension market. Now, their intention is to deliver economies of scale to release funds to invest in UK infrastructure but also improve member outcomes as well. Now, it wasn't aimed specifically at Master Trusts. I know it says master trusts up there, but it was to the workplace pension market in general, and in fact it covered the myriad of local government pension schemes. 86 of them, by the way, in England and Wales, which could be consolidated. The government in their consultation suggested that the benefits of scale start to arise at about the 25 billion to 50 billion mark and proposed minimum asset requirements for default arrangements by 2030 in a bid to encourage scale, and consolidation in the defined contribution market.

Now the 28th of May 25, a government press release confirmed these reforms are set to be introduced through the pension schemes bill, which will mean all multi-employer defined contribution pension schemes and local government pension scheme pools operate at a mega fund level, managing at least 25 billion assets by 2030.

In March 2025, lane Clark and Peacock produced their master Trusts unpacked paper, and they looked at which master trusts would meet this minimum asset amount. And by extension, which ones would need to consolidate to two 25 billion pounds. And this is an extract which are looking at on screen just now.

Now you can see here there were only three, which met the minimum. It was Legal and General, Nest and the People's Pension. Some of them are well off. I need to point out that the assets are the total assets in each master trust. So, it's not just how much is in the default work fund, which will be lower.

But I also have to say that some of the traditional pension providers on the list will also have contract-based schemes with the same default fund as they use for the master trust. They may indeed reach that minimum of 25 billion. Another thing to point out is that Royal London's default fund is at the 25 billion mark on its own so we don't have concerns about having to consolidate, but you can see some of these master trusts will be at threat. So if you are speaking to employers and they're in one of these master trusts, you should highlight that their master trust may need to consolidate shortly and also highlight the implications this may have for both the employer and their employees.

And finally, well you know, it looks like the pensions dashboard is going to cross the line finally, mind you I’ve been saying that many times over the last few years. There’s a long list of when different types of size of schemes have to connect. So it started with the very largest schemes, that was on the 30th of April 2025, with a very small having to connect by 30th of September 2026.

So the final connection deadline is the 31st of October 2026. What I haven't seen yet though, is when the pensions dashboard will be live for customers and your clients. But presumably this will be shortly after the final connection deadline. Okay, that's all we've got time for today.

I'll just let you have another look at these learning outcomes again.

It's been a real pleasure. Thank you very much for listening to both Justin and myself. And here are the legals – because obviously you wouldn't want to miss these. And it just leaves me to say thanks very much for your time. I hope you found this useful. As usual, if you do have any questions, then go to your usual business development manager or your account manager in the first instance and they will pass these questions on to us. Okay, thank you very much.

Justin Corliss: Thanks everyone.