How pensions technology is empowering strategic decision-making and effective de-risking for employers
Providing assistance to employees as they contemplate their latter years of service has never been a copy-paste-done kind of undertaking. Where strategic decisions about financial futures and de-risking are concerned, there are too many individual variables. HR executives know exactly what this means in terms of time and effort required (we’ll whisper this, but you can include patience too). When your currency is people, particularly high-earners who sit in high office, you could even add a soupçon of pressure to the mix.
Tools that fix lives
While there has never been any substitute for getting up close and personal to evaluate and understand each executive’s situation, technology is now on hand to cut through the fact-finding missions – and yes, save you time and trouble in the process. The right tools are also geared towards producing completely personalised solutions.
There are two key areas in the de-risking process – retirement options and pension annual allowances – where technology can help high earners avoid any unexpected tax charges (they don’t normally like surprises) and afford the company the luxury of smooth staff transitions in the process.
Choosing the right retirement option
Let’s do the honourable thing and put people before company for a moment. Helping your employees smoothly swim into life post-work needs preparation if financial pitfalls are to be avoided. Online modelling tools like Retirement Options Planners are simple to use and can assist them greatly in navigating their golden years. Input data like the type and value of current pensions, outgoings, employer contributions and state pensions, and they’ll be presented with workable solutions. These can align with any existing support they may have and give them a much clearer idea of when they can retire.
With visibility on numbers (and it helps when they’re all in one place), employees can compare ways in which to draw on their pensions – at a glance. They may choose to reinvest their pot into funds designed to provide them with a regular retirement income. Or opt for a lump-sum payment and a stream of future income through an annuity. They may even prefer to withdraw their pensions for cash, but in sensible ways. No matter what their preference, the information is available at the touch of a button, with experts at the ready should they need them.
This level of foresight builds a degree of certainty (not to mention peace of mind) around the future, easing the over 65s into their third age – no shocks, no bumps. Concurrently, it gives companies the opportunity to activate some succession planning, paving the way for strategic decision-making and perhaps even freeing up roles for younger employees. ‘Everyone’s a winner’ comes to mind.
Taking the risk out of annual allowances
Your company’s high earners – often more senior members of staff – are those most likely to be affected by the annual allowance regulations. Hefty, unexpected tax charges lurk menacingly for executives who are left in the dark on this subject. When you consider they could well be somebody you know as a boss, it might well be worth putting this one on your next ‘to-do’ list. Should critical tax information pass them by like a ship in the night, well, you can fill in the blanks.
Pensions technology can do the de-risking job for you. Bespoke, annual allowance, self-service portals will explain all the charges. The best sites will show how they work, often through short videos. Users will be able to securely enter their basic financial information around tax and be instantly presented with a result. Knowing the threshold of their contribution levels will help them avoid any unexpected tax flak.
Should they be affected by the annual allowance, next steps will be outlined to reduce the tax bill. Professional employee benefits companies will implement and manage an annual allowance portal for you, for a fixed cost. The set up is quite fast.
At its best, pensions technology is functional, practical and highly beneficial, supporting companies and employees alike with strategic decision-making about their respective futures. These tools may be great enablers, but their impact goes beyond numbers to the very heart of wellbeing.