Covid-19: How HR can support employees with the decision of early retirement
The current crisis has prompted a swathe of queries from employees who want to retire sooner rather than later. How can HR support these members of their team?
Whether your business has brought staff back into workplaces, or whether you are still working remotely or with staff furloughed, HR is seeing an increase in queries from staff who want to explore the possibility of retiring sooner rather than later.
One of the key things that staff are looking for when they are approaching HR is help in finding the right information and advice to understand if retirement is a realistic option for them.
Many HR professionals that have considered providing financial education to their staff are finding that this need is becoming more pressing very quickly. This is especially the case for businesses that offer Defined Contribution pension plans (the most common types of workplace savings vehicles).
The array of choice and flexibility available to staff who wish to retire can be bewildering and a real stumbling block for staff who are looking to understand how they might take benefits, especially if Covid-19 has prompted them to revisit long-held plans around when they might cease work.
As well as providing robust financial education to staff from specialist providers, HR teams are also well advised to make use of signposting to free resources, like the Money and Pensions Service.
One of the biggest surges in demand for advice over recent months has been in people looking to understand if their retirement and other savings as they stand currently are sufficient .
Queries about potential retirement are coming from a wide array of staff, for example those who have been furloughed and may have been within a few years of retirement, but have found the slower pace of life forced by the pandemic to have some appealing features.
This is particularly common among staff who are facing a return into very challenged industries, and rather than enjoying a gradual wind down to retirement might instead be looking at the prospect of some very tough work years before they can hang up their hats.
Key information for HR to be armed with includes signposting staff to resources that can help them avoid the risk of falling prey to a pension scam. The Financial Conduct Authority has published useful guidance that has also been updated to cover some of the specific pensions scam scenarios that have arisen in the wake of coronavirus. Especially for employers that perhaps need to reduce headcount whilst facing tough trading conditions, having staff who cannot afford to retire because they have been scammed is particularly unhelpful.
Trustworthy advisory partners
One of the most common questions that HR is fielding relates to helping staff to source trustworthy and high-quality financial advice. Even for staff who understand the range of choices and options available to them at retirement, navigating this alone can be both complicated and risky, especially given that some decisions are tricky or impossible to revisit once made.
For employers that already work alongside advisory partners these relationships are proving more valuable than ever and, for those that perhaps haven’t yet established these links, it might be an effort well worth investing.
Advice is often critical prior to staff being able to even decide if retirement is realistic. One of the biggest surges in demand for advice over recent months has been in people looking to understand if their retirement and other savings as they stand currently are sufficient to cover their required outgoings both now and through retirement if they bring forward plans to retire.
Advisers who specialise in cashflow modelling and retirement advice have therefore found their skills in high demand. Staff often look to their employer for assistance in this regard and providing access to advice doesn’t even need to cost employers a lot.
Some HR teams with available benefit budget might make this available to subsidise advice costs for staff that are approaching retirement or at key life stages but, for those that don’t have such deep pockets, using salary exchange for financial advice can be a highly valued employee benefit that doesn’t require a budget – and, in fact, can provide employer national insurance savings to boot.
Financial advice as a benefit
Creative use of financial advice as a benefit can also be an invaluable tool for HR teams and professionals that are considering or undergoing redundancy exercises. For staff facing redundancy that are closer to retirement, receiving good advice at this juncture about best use of any redundancy payments, eligibility for state benefits and state pension entitlements and then advice around best use of existing savings and pensions can be critical.
In some cases, it can even help to salvage a very distressing situation into one that is manageable or, in some cases, even rather appealing if retirement is viable and affordable.
HR professionals need to be adept at providing staff with support and guidance without straying inadvertently into the realms of giving advice, as this is a tightly regulated function and can be quite onerous.
Making sure that the right suite of signposting, advisory support partners and creative thinking around employee benefits are all part of your armoury is now even more essential than ever.
Interested in this topic? Read Why you must not overlook financial wellbeing for older workers.