CHELSEA — The papers are full of dire predictions about final salary pension schemes (also known as Define Benefit pensions). Watson Wyatt have put out a paper saying the last ones should close in the next few years.
Watson Wyatt (@watsonwyatt) should know. Along with Mercer and Towers Perrin they built a lot of the DB schemes. And when I worked at Towers Perrin I spent more than 5 years discussing pensions and helping communicate them to employees.
The difficulty with pensions will be the same as we close them as it was when they are open. It’s the same with the Defined Contribution schemes (employee managed lump sums) that are replacing them too:
Organisations struggle with business education.
Pensions are only one of many benefits that organisations offer people that people don’t understand. And therefore when they are taken away, or diminished in some significant way, we really don’t know what to do about it.
There is a good reason why organisations should invest more in educating people about these things: it’s part of all of our larger business education.
Employees who are better educated in financial matters will invariably be better employees. They’ll make better business decisions. They’ll value their jobs and benefits more. They’ll have a better understanding of how the world works.
So, why not think about your business education in a wider frame? Don’t just plan to tell people about DCs when you get rid of your DBs, but plan and entire curriculum of business education and deliver it consistently.
We’re here to help.