HR & Hospitality Bites Issue 3 - April

April 2017 / Issue 3

Find out how she

explored the whole

of America

'I'M

FINE!'

Are your staff as ok

as they want you to

believe?

EMPLOYEE BENEFITS

SUCCESS

Pensions: The

Consultant's View

11 18

Once a month insights, features and interviews for

HR professionals in hospitality

03FREEDOM!

Employee

empowerment the

$2000 way

LIVE LONG AND

PROSPER

25

Why financial education

is the key to employee

engagement

Contents

03

11

18

26

Freedom! Employee empowerment the $2000 way

'I'm Fine!' Are your staff as ok as they want you to believe?

Employee Benefits Success Why financial education is the key to employee engagement

Live Long and Prosper! Steve Torbett explores the sobering reality of pensions and living longer

50 Broadway, St James, London, SW1H

020 7152 4107

www.damgoodpensions.com

ISSUE 3

16 Sandyford Place, Glasgow, G3 7NB

0141 222 2045

[email protected]

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April

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Freedom! EMPLOYEE ENGAGEMENT

HR & HOSPITALITY

“ For many, the

£200,000 - £250,000

pension pot is a distant

dream; the level of

monthly savings

required to get to that

target is simply

unsustainable for

most. "

EMPLOYEE EMPOWERMENT

0

03

Our industry may be the least likely to offer scope for

freedom in making decisions to our frontline staff, partly

because of the nature of the beast; the way we operate

is run pretty much by systems and processes and also

because we don’t always think of customer facing teams

as being the decision makers.

Employee empowerment the $2000 way

The decisions are made by the people behind the desks aren’t they? Which, when you see it in

writing just feels a bit…wrong.

Think of a situation that we have all encountered whilst staying in a hotel, eating in a restaurant

or enjoying any aspect of our touch point with the hospitality industry. Then think

of that situation where something goes a bit wrong and the reaction to that. Is it “I’m terribly

sorry, let me speak to my manager” or is it “I’m terribly sorry, let me personally fix this for you

right now. Here’s what I’ll do”?

Hmmm – more likely to be the first, and how does that make you feel? Let me suggest. It

makes you feel like your complaint will receive an entirely un-bespoke solution – a service

recovery that has been created by a formula, designed by management, probably written

down somewhere in a book and kept in a drawer (definitely floating around a PowerPoint…)

and wheeled out in its unmodified state whenever needed.

It makes you feel like you’re a number, a ‘situation’, not really

a cash paying human being who has chosen this as an

experience. It makes you feel, well, a bit like this type of thing

might happen a bit more often than anyone would like it to

(which is why there’s a ready made solution...). So how would

you feel if the person serving you, checking you in/out,

whatever it is, listened to you and came up with a solution to

make everything better right there and then, on the spot,

without having to scuttle off into a hidden room through a

door in a wall before coming back to you with a middle of the

road, standard solution.

$2000 is an eye-

popping amount

of financial

freedom for any

employee to have

with the company

purse.

PAGE 10 HR & HOSPITALITY


04

You’d probably feel quite good. Like you’re being treated as an individual, that the person dealing

with your ‘situation’ cares enough to think through the experience from your point of view and

come up with a remedy as a response to that. You’d probably feel that the organisation behind

that is forward thinking and confident enough that it inspires its teams to think logically, creatively

and feel empowered enough within themselves to deliver that level of guest experience. An

organisation that chooses only the best people to work for them.

Thinking people. With switched on heads and

hearts. For decades the Ritz-Carlton Hotel Group

has given its employees a $2000 discretion to make

it right or delight. That’s $2000 per situation, not

per annum. $2000 is an eye-popping amount of

financial freedom for any employee to have with

the company purse.

But I suppose, it’s all about how you define cost. Cost of keeping a (hopefully loyal) customer/future

ambassador vs cost of losing a customer. $2000 doesn’t seem like such an expensive mend. The

average Ritz-Carlton customer spends around $250,000 with the group in their lifetime. And in any

case, it’s not ‘all about the money’.

Apparently, the full $2000 has never been needed. It’s not about the money being used to fix a

situation, it’s about the empowerment of the employee and the removal of any restrictions in the way

they help, care for and treat a customer, eliminating the feeling of the hand tied behind their back. It’s

about putting a relationship approach before a transactional one and allowing staff to use their intuition

to exceed the expectations of a customer. It's not necessarily used as a fix either. Employees have the

freedom to use their hearts and minds to make an amazing experience truly exceptional.


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Staff replaced a little boy's

lost Thomas the Tank

Engine when they

learned that his favourite

toy had gone missing as

the guests were

departing. They snapped

Thomas in a variety of

locations around the

resort, sent the child a

photograph album of

Thomas' 'holiday'

adventures and the

replacement toy.

A lost Joshie enjoyed an

'extended vacation' before

being reunited with his

owner, along with an

album of Joshie's holiday

memories.

FINANCIAL EDUCATION

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1. Social media at work

No more staring at a blank Outlook message

wondering how you can phrase ‘Can you please

just send me the info right now?’ in a slightly less

demanding way and proceeding to rattle off the

usual email niceties… We’re talking speed,

brevity and no more ‘Hope you had a lovely

weekend’… Quick and easy exchanges, saving

time, cutting down in email overload. Why

wouldn't you?


2. In an Instant

The way to reduce the risk and fear element is in how

you empower your employees. It’s not a case of

delivering a carte blanche, it’s about having a

framework to give your employees confidence in the

boundaries of their freedom to make decisions,

providing a set of clear guidelines. It’s about giving

your teams autonomy as individuals to make your

brand look good.

The people who are in the best position to know your

customer needs are the ones in front of them, but if

they’re following a set of rules and processes rather

than guidelines, part of their intuition, personality,

will to exceed expectations and truly surprise and

delight will be switched off.

It’ll be stifled, numbed and partly dormant, which

results in bland, standard, impersonal service. The

stuff that sets you apart from your competitors – and

not in a good way…


So why are we not all doing it then, when we know that the impersonal ‘I’ll get my manager’

approach is such a huge turn off? Fear of lots of things. Bad decisions, creating unrealistic customer

expectations, setting a precedent, throwing big money at small problems and opening the

floodgates, to name a few.


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2. In an Instant

4. Spread the love

We only have to look to how brands engage with customers via social media to see how much the

style of customer service has shifted over the past couple of years. Standard responses have become

unpopular in an age where customers expect personality driven responses, something that’s a

genuine response to their tweet/complaint/questions/letters. It's also an opportunity for brands to

express their personality and win a bigger (and more permanent) place in the customer's heart.

Standardisation is out.

Being real is in, and yes, of course

systems and processes are the

bones that piece an authentic,

quality experience together but

it’s personalisation and

personality that bring it to life and

make it fly higher than the

customer expected it to.


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2. In an Instant

4. Spread the love

So how can you empower your teams to ‘be them’, work with freedom, enjoy their jobs

more (because providing amazing service feels good) and connect on a deeper level

with the customer (without it costing you $2000)?

1. Empowerment guidelines

Virgin Airlines allows employees to work within a ‘judgment playing field’, whereby

senior management specifically defines where employees are and aren’t allowed to

deviate from established rules and processes – and then gives them the flexibility to

experiment with new ways for serving customers.

2. Communication of your mission, vision and values

If your people understand why, they’ll feel more comfortable with finding a ‘how’.

Understanding the ‘big idea’ is crucial for employee engagement and empowerment.

It gives them something to work towards, something to get excited about, something

to be inspired by – a common goal.

3. Support

Have a safety net, a sounding board – something which makes your teams feel more

comfortable in making that decision. Ensure that every employee has the right training,

resources, back up and support they need to do their jobs and feel empowered and

confident to make the best choices in every situation.

4. Trust

Trust inspires trust. The more you trust, the better the relationship you have with your

teams and the better service they'll deliver. Take a step back, give some space and

freedom and let your people shine.

5. Leadership

Inspiration, especially for new staff has to come from the already inspired. People feel

more comfortable and confident when they see a set of values being lives and

breathed by the folk running the show. Otherwise it's just words, on paper.

Empowering your teams through ‘freedom’


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4. Spread the love

7. Praising the good decisions

Empowerment is all about confidence boosting and there is no greater boost than

knowing you’ve made the right decision. Recognise and reward.

6. Hire the right people

Richard Branson explained that once you hire the right people and give them the best

training, let them use their imagination and creativity to solve problems. “Rather than

providing rules or scripts, you should ask them to treat the customer as they themselves

would like to be treated – which is surely the highest standard,”.

8. Communication

Creating an open, honest, ideas culture where employees feel comfortable in coming

forward with questions, feeding back where things didn’t go quite right and of course

expressing new ideas and solutions, giving their experience of where it’s worked an

where it hasn’t.

9. Have their backs

Knowing that senior management will cushion any decision mishaps and protect staff

is key to empowerment and confidence building. Nobody’s going to stick their neck

out unless they have the support and backing of their manager.

10. Review your policies

Do your policies feel like they might help or hinder employee empowerment? If

employee empowerment is your goal, the way you express that in your policies is key

to making this live and breathe in your organisation.

Great things can happen when employees are given more power in the decisions which they are

faced with every day of their working lives. A greater sense of ownership, pride in their work,

improved performance and a more ‘real’ sense of service. And of course, the likelihood that you're

going to be able to give your customers something that they can't get anywhere else.

The reasons ‘to do’ outweigh and outnumber the reasons and risks not to. In an age where love is

worth more than money, where relationships are everything, and knowing that you can’t legislate for

every situation in life, it seems like a pretty good time to give more power to those who truly make a

difference to your organisation, brand and customers – your people.

Y O U C A N ' TC H A N G E T H E

W I N D . B U T Y O U

C A NA D J U S T Y O U R

S A I L ST O

R E A C HY O U R

D E S T I N A T I O N

P A U L O C O E L H O

10

EMPLOYEE ENGAGEMENT

HR & HOSPITALITY

“ For many, the

£200,000 - £250,000

pension pot is a distant

dream; the level of

monthly savings

required to get to that

target is simply

unsustainable for

most. "

FINANCIAL EDUCATION

0

11

“How are you?”. “I’m fine!”. How many of us offer that response when we’re asked

that question? Probably abut 95% with the other 5%

being so honest in their answer that they have the ‘asker’

recoil immediately and walk backwards at speed… Which is what we don’t want, so we tell a white lie. We say that everything’s ok. When it’s not.

In any case, everything that goes on in our world is too ‘big’ to encapsulate in any sort of

response to that question, so there’s never any point in asking it.

It’s a useless nicety. A formality. An opener.

You can probably split our lives into five areas; ‘us’ as a person, family, job, health, finances. If

you ask a member of your staff, “How’s your family?”, you’ll probably get a reasonably full and

frank response. If you ask someone ‘How’s your health?”, same; people will also tend to be

honest as far as is comfortable for them to do so.

If you ask someone ‘How are your finances?’, you’ll probably be looking at someone who is

awkward eyeballing the floor, asking it to swallow them. It’s too difficult to ask, to

uncomfortable to respond to, so it’s better just to sweep under the carpet really isn’t it. Or is it?

FINANCIAL EDUCATION

Recent research by Wealth Wizards revealed that a third

(31%) of respondents believe their employer takes a greater

interest in their physical health than their financial health. Its

survey of 2,000 individuals also found that 70% of

respondents feel that their physical and emotional wellbeing

is negatively impacted when they are in poor financial

health.

58% of

respondents

believe their

financial health is

just as important as

their physical

health, and a

further 10% believe

their financial

health is more

important than

their physical

health.



12

The research also found:

• 62% of respondents are worried about not having enough

money when they retire.

• 36% of respondents think their current financial situation

causes them more stress than their physical health, and 34%

believe this will continue into retirement.

• 58% of respondents believe their financial health is just as

important as their physical health, and a further 10% believe

their financial health is more important than their physical

health.

As employers, we’re pretty ‘up’ on how to support the physical wellbeing of our staff but could we

be doing more to protect our staff from financial stress, given that it has a significant impact on

their emotional wellbeing?

FINANCIAL EDUCATION

https://www.wealthwizards.com/media/the-impact-of-financial-stress/

Giving your employees access to financial advice is just as important as giving them access to the

other benefits you provide. Not just for their benefit, it's for yours also.

More than a third of employees are distracted at work by financial concerns, according to research

by MetLife UK. Its UK Employee benefits trends study 2017, which surveyed 301 employees and

600 HR representatives and decision makers in the UK, also found that more than half (54%) of

employee respondents aged 18-30 years old are distracted by financial worries at work.

The link between financial stress and productivity is clear. It’s entirely likely that just over half of

your workforce are not giving you their best because of the financial stresses they carry every day

of their lives.

So, financial education is not just a ‘nice thing to offer’, it’s a ‘do it or it’ll cost you’ in terms of the

service your deliver to your customers and ultimately, how productive and profitable your

organisation is.

Employees who are able to give you their full focus are always going to be able to contribute more

than anxious, distracted employees, therefore it’s in your interests to help them tackle these areas

of potential stress to enable them to go about their jobs in a ‘lighter’, more engaged way.


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FINANCIAL EDUCATION

FINANCIAL EDUCATION

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No more staring at a blank Outlook message

wondering how you can phrase ‘Can you please

just send me the info right now?’ in a slightly less

demanding way and proceeding to rattle off the

usual email niceties… We’re talking speed,

brevity and no more ‘Hope you had a lovely

weekend’… Quick and easy exchanges, saving

time, cutting down in email overload. Why

wouldn't you?


2. In an Instant

FINANCIAL EDUCATION

The research also found:

• More than half (53%) of employee respondents are interested in receiving financial

counselling.

• 42% of employee respondents are concerned about credit card debt.

• 57% of employee respondents are worried about the financial security of their family

if the main wage earner is unable to work as a result of a disability or serious illness.

• 57% of employee respondents are concerned about the financial security of their

family in the event of their premature death.

• 41% of employee respondents are worried about the affordability of their children’s

education.

• More than a third (39%) of employee respondents report that they are living from

payday to payday.

• 35% of employer respondents offer workplace wellness schemes.

• 87% of employee respondents agree that wellness programmes have a positive

impact on their health.

FINANCIAL EDUCATION

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2. In an Instant

4. Spread the love

Financial education in the workplace – what’s the right approach?

1. Sensitivity

The younger generation might be more open to discussing their financial issues with

you but the older generations may not be. Finances, along with mental health

remain the two biggest taboos in the workplace so the way you approach it is critical

to achieving a successful outcome. Creating a culture of openness and

confidentiality is the first step to inspiring trust within your employees and ‘making it

ok’ for them to have these conversations with you. Nudge Global’s research found

that confidentiality is key in the provision of a financial education support

mechanism for 77% of employers.

2. Open conversations

Discussing options rather than a ‘you need to do this to fix it’ is the way forward. And

there will always be a range of options. Every problem has a solution and as an

employer, the solutions you take the time to research and present will hold more

weight to your employee than perhaps them going to an external provider.

FINANCIAL EDUCATION

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2. In an Instant

4. Spread the love

3. A holistic approach

There is nobody better placed to create an individual plan to support your employees’

financial wellbeing than you. You are the primary source of income, you offer a range

of benefits and can tap into the financial knowledge of your employee benefits

provider (in this case, that’ll be us!) so you’re in the unique position of being able to

build a solution for them, bringing together different elements of your employee

benefits programme such as workplace loan, pension advice, debt counseling,

childcare vouchers, retail and other discounts.

4. Being honest with your agenda

If you’re going to make your financial education programme work, you have to be

very clear about why you want to do that. You’re most likely going to be

recommending external providers, who somewhere down the line will make money,

which your employees will no doubt be aware, so your programme has to be

absolutely transparent to avoid a situation where employees feel they are being

opened up as a potential ‘market’ to a third party provider. Nobody wants to feel

vulnerable or indeed that they’re being ‘sold to’.

Financial education programmes

need a strategy and a reason, both of

which should be clearly

communicated.

The benefits of a financial education

programme are clear, but do you

really need one?

If you’re ticking more than just a few

boxes over the page, it’s likely that

there is an opportunity for you to

address a number of issues by

offering financial education as part

of your range of employee benefits.

FINANCIAL EDUCATION

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4. Spread the love

And of course, having a financial education

programme shows you care, are interested

in the emotional and financial wellbeing of

your staff and will support them over a

period of time to deal with their financial

issues. That in turn inspires loyalty, a closer

bond with your employees and gives you a

‘better’ employee.

Remember, this is the stuff that keeps

people awake at night and has the biggest

impact on anyone’s ability to give the world

the best ‘them’ the following day.

Part 2 of our Financial Education

series looks at how to shape and build

your financial education programme.

Your organisation is going through, or has gone through the auto-enrolment

process

You offer a defined-contribution benefit plan with a range of options.

You offer a share save or share incentive plan

There is a low take-up of your benefit options

Your staff focus more on salary rather than the full package of benefits you offer

You have poor engagement generally within your teams

Absentee-ism (especially stress related) is high

Does your organisation need a financial education programme?

EMPLOYEE ENGAGEMENT

HR & HOSPITALITY FINANCIAL EDUCATION

0

18

In the last issue we explored the relationship between

financial stress and ‘us’ as employees (and employers)

and looked at the benefits of a financial education

programme in the workplace.

As employers, we’ve known for many years how to support the physical wellbeing of our

teams, but it’s only within the last five years or so that the wellbeing focus has acknowledged

the significance that financial stress has on a person’s wellbeing, in and out of the workplace.

It’s not something that switches off. Financial stress is there all the time.

The UK Employee Benefits Trends Study 2017 by MetLife UK, which surveyed 301 employees

and 600 HR representatives and decision makers in the UK found that more than half (53%) of

employee respondents were interested in receiving financial counselling and more than a third

(39%) of employee respondents report that they are living from payday to payday.

Financial stress plays a huge part in productivity as it’s one of the biggest influencers in a

person’s emotional wellbeing and one of the key factors why that person’s not able to give you

the very best version of ‘them’ every day.

Financial education in the workplace, while it may seem like a

‘nice to offer’, it’s actually a great deal more than that. If you

choose not to do it, it may well cost you in terms of the

service your teams provide, how engaged they are and

ultimately, how productive and profitable you are as an

organisation.

Financial education benefits you both.

Understanding the

value of the

benefits

programme you

provide is what

engages your

employees and

empowers them to

get the most value

from what you offer

them.



19

It’s also key to engaging your staff in your employee benefits

programme. Improving the financial awareness of your

employees enables them to make more informed decisions

about what benefits are right for them, and helps them to

build a package of benefits which really do work for them,

their lifestyle and their families, which ‘ups’ the value you

deliver to them as an employer and creates loyalty, increased

engagement, motivation and that all important word –

retention.

Understanding the value of the benefits programme you

provide is what engages your employees and empowers

them to get the most value from what you offer them and by

providing the education behind this, you not only create that

opportunity for understanding, you let them know that you

really do care about their wellbeing and that they’re valued.

FINANCIAL EDUCATION

https://www.wealthwizards.com/media/the-impact-of-financial-stress/

We looked at some of the indicators which may make you want to consider whether you do need to

build a financial education programme in the last issue - these will help you to define your

objectives of the programme and shape your goals.: EMPLOYEE EMPOWERMENT

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FINANCIAL EDUCATION

• Your organisation is, or has gone through the auto-enrolment process

• You offer a defined-contribution benefit plan with a range of contribution and investment

options • You offer a share save or share incentive plan

• There is a low take-up of your benefit options

• Your staff focus more on salary rather than the full package of benefits you offer

• You have poor engagement generally with your teams

• Absentee-ism (especially stress related) is high

Source: Barclays Financial Well-being Infographic

https://wealth.barclays.com/global-stock-and-rewards/en_gb/home/research-centre/financial-wellbeing-infographic.html

FINANCIAL EDUCATION

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2. In an Instant

FINANCIAL EDUCATION

1. What are we doing this for again?

Building your financial education programme

Objectives - defining exactly what it is you want to achieve is

crucial, otherwise it all becomes ‘a nice thing to do because it’s a

nice thing to do’.

Why does your organisation need a financial education

programme? What needs do you want to address? Reducing

absenteeism or ‘presentee-ism’ related stress? Improving

understanding of the benefits you offer to increase engagement?

Providing your employees with tools to develop better money

management skills?

The only way to build a solid programme (which you can

evaluate) is to establish clear goals and objectives at the outset.

2. What does success look like?

Evaluation - when you’ve set your objectives, you should start

to build your evaluation process and gather your baseline data

which you will measure against once your financial education

programme launches.

Regular monitoring and evaluation is essential to build a

picture of what’s working, what’s not, what can be tweaked

and to establish whether or not you require any more resources

to run the programme.

3. Money, money, money!

Budget - you know what you want to do, but the way you’re

going to do it will be influenced mainly by one thing – how

much you’re able to invest in your programme. It doesn’t need

to cost the earth and it could be a case of reallocating some of

your employee benefits communications programme budget.

It’s also important at this stage to establish your internal

resource and the logistics of rolling out the programme – do

you need additional expertise, external suppliers or do you

have the capability and resource internally?

So where to start? You’ve established the need for a financial education programme, what next?

FINANCIAL EDUCATION

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2. In an Instant

FINANCIAL EDUCATION

4. All kinds of people


Audience segmentation - your people are different ages, at

different stages in life and have different needs and wants. In fact,

by 2020 we will have the first ever four generation workforce.

Something huge to consider. One size never fits all and what

floats one person’s boat is an immediate turn off to another.

Segmenting your staff and establishing the different needs of

these segments is key to being able to develop clear messaging

that resonates within each of these groups and ultimately, for the

success of your programme.

6. The people who can make it fly or die…

Stakeholders - who do you need ‘buy in’ from internally to

make your programme ‘fly’ (and not die!)?

It’s important to bring your key stakeholders in as early as

possible and take them on the planning journey with you,

perhaps not all of them (you will most definitely not ever want

to do that…), but maybe you’ll have representation from senior

management in the project team and develop a mechanism for

feeding back progress and updates.

5. Calling in the experts

Consultants - if you use an external supplier, it’s important that

your teams become familiar with who that is, who they are and

what they do. People buy people after all and

your programme will have a much bigger impact if your teams

have developed trust in your supplier.

Many organisations say that the success of their financial

education and benefits programmes are down to the dedication

and enthusiasm of their external consultants and also the fact that

the messages communicated are seen to be more credible as

these people are independent.

Sometimes you can do it all yourself, sometimes it really does pay

to get the experts in.

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2. In an Instant

FINANCIAL EDUCATION

7. It’s not just what you say, it's how you say it


Communication - how are you going to communicate the

different messages of the programme to your segmented internal

audiences? What methods are you going to use? What tools do

you have and what tools do you need?

Don’t be afraid to do some testing at this stage to make sure

you’re using the right communication tactics to target the right

people within your organisation. Talk to them, do some quick

surveys, find out what mediums are going to be most effective to

really make your programme fly!

9. The hook

Launch - what is going to be happening within the next year in

your organisation that you can ‘hook’ the launch of a financial

education programme to. It will launch far more effectively if it

has something to hang on, so look at what sort of financial

events or announcements are on the horizon within your

organisation that you can use as a platform to roll out your

programme.

8. What did you say again?

The messages - defining the messages you want to communicate,

be understood and prompt action is a hugely important part of

the planning process. The more meaning a message has to an

individual, the more likely they are to change their behaviour, so

this means looking at everything you’ve done so far –

understanding your staff needs, who they are and how they like

to communicate (and be communicated to), being clear about

your objectives and then building strong messages that will mean

something to each of your audience segments.

10. Roll it out

Delivery - plan your launch date and work your way backwards to build your timeline of

communication. This is the period when it’s going to be massively important to bring these key

stakeholders in to ‘champion’ your programme and start sowing the seeds. Be prepared for curiosity

and questions and make sure you and your team have the answers for them. This is the stage where

you can start to get buy in from your teams so building trust and confidence is crucial.

FINANCIAL EDUCATION

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4. Spread the love

DAM has supported a number of

organisations in the hospitality industry

to build and launch financial education

programmes and we’re delighted to

have been invited to share our

expertise as part of this year’s Caterer

HR Forum on 24 April.

The Forum will educate and inspire

people leaders working within the

hospitality sector – it’s a must attend

event for any HR professional working

in a restaurant, hotel or contract

catering business.

We hope to see you there!

The DAM Team

http://www.thehrforum.com/

http://www.damgoodpensions.com/

http://www.thehrforum.com/

Humans living longer – shock!

It is just over a hundred years since the UK

introduced the first basic state pension. Just like

today, you got it at 65 but this is where the similarity

ended.

Back then, only men were eligible and anyone who

was deemed of “poor character” or had been

convicted of drunkenness was excluded. Jeepers!

Single men got 5 shillings a week (5 pence) and

married men got 7 shillings and sixpence (7 and a

half pence).

EMPLOYEE ENGAGEMENT

We can all

benefit from

greater flexibility

in pensions but

at what cost?

Steve Torbett

from DAM

explores the

sobering reality

of living longer...

THE CONSULTANT'S VIEW

25

A woman getting to 65

can expect to live even

longer. And the experts

tell us that this

improvement in our life

expectancy will get better

still. A baby girl born in

2017 has an evens

chance of living to 100.

There is also a growing

expectation that the age

at which we get our state

pension will drift out

further, especially for

workers currently under

45. If you were born

before 6th December

1953, you will still get your

state pension on your

65th birthday.

If you were born after that

date, your pension age

will be older. This change

has been in place for

some time but the

government is expected

to review this for younger

people, pushing their

retirement age out to 69,

70 or even older.

Sobering news. The

consequence of this huge

improvement in life

expectancy is that our

pension pots will need to

last a lot longer. But this

need to make our funds

stretch further comes at

The new maximum basic

pension from April 2017 is

£159.55 although how

many will get this amount

is not clear. The full

amount will only be given

to workers who complete

35 years of National

Insurance contributions.

Thankfully the character

test has gone but the

government is

considering other

changes that will reduce

how much we get or when

we get it.

Today the state pension

increases each year by

either inflation, average

wage increases or 2.5% -

whichever is the higher. It

looks increasingly unlikely

that this 'triple lock' will be

watered down or removed

altogether.

Perhaps the biggest

difference though is how

long the first state

pensions were paid for.

In 1909, a man reaching

65 only had a 50% chance

of reaching 66. The world

has of course moved on.

Men and women currently

have the same entitlement

which starts at 65.

The experts tell us

that this

improvement in

our life expectancy

will get better still.

A baby girl born in

2017 has an evens

chance of living to

100.

PAGE 10THE CONSULTANT'S VIEW

the same time as private

pensions becoming more

flexible.

Since April 2015, anyone

over 55 has been able to

dip into their pension fund

whenever they want.

Before that date, the over

55s could take their lump

sum but if they did so,

they had to take an

income as well. George

Osborne surprised

everyone by removing

that rule.

At the time, commentators

suggested that people

would cash in their pots to

buy Lamborghinis but the

reality has been more

mundane. 26

to have this option within

their existing scheme. This

has led to many people

transferring out of their

existing arrangements but

this route is fraught with

problems. Anyone

considering this must

seek financial advice and

that advice is often to stay

put.

Another reason to think

twice is that the amount

you can save into a

pension drastically

reduces once you have

taken your lump sum.

From April 2017, the

amount you can pay in

each year reduces from

£10,000 to £4,000. If your

usual contributions are

below this, then you might

decide this is not a factor.

However, many people

have income that is not

guaranteed and can

fluctuate from year to year.

If you have taken your

lump sum and then have a

very good bonus or

trading year, you might

regret limiting your ability

to save into your pension.

For others, the obvious

difficulty is that dipping

into their pension now

means less funds

So, for most working folk,

the best answer is usually

to leave your fund as long

as possible. While your

money is invested in the

pension, it grows virtually

tax free. So, the longer you

leave it, the faster it should

grow. In most cases, this

means looking at other

solutions.

Can you access other

investments instead?

A recent survey of those

who have dipped into

their pension pots

concluded that most

people have used their

lump sums to pay off

mortgages and other

debt, make home

improvements or go on

holiday. Over half of the

lump sums encashed

were for less than £10,000

(source: ABI report,

August 2016). However,

after the initial rush of over

50s cashing in their funds,

the volume of people

using this option slowed

significantly through

2016.

Not every pension fund

allows you to access your

cash in this way. Anyone

with a pension based on

their final salary is unlikely

PAGE 10THE CONSULTANT'S VIEW

Steve Torbett

Consultant

[email protected]

available for their old age.

If you (or your partner)

have substantial pensions

or savings elsewhere then

this might not be so

important. However, if you

do have other savings,

you should consider using

them first instead of your

pension.

The obvious conclusion is

that we can all benefit

from greater flexibility in

pensions but we need to

make clear and conscious

decisions about how we

will fund our lifestyles in

old age. Whatever you

decide to do, it will help to

have a plan about what

retirement will mean for

you and (of course) to

build your pensions and

investment pots as early

as possible.

As Mr Spock used to say,

live long and prosper!

27

P E O P L E A R E A L W A Y SB L A M I N G T H E I R

C I R C U M S T A N C E S F O RW H A T T H E Y A R E . ID O N ’ T B E L I E V E I N

C I R C U M S T A N C E S . T H EP E O P L E W H O G E T O N I N

T H I S W O R L D A R E T H EP E O P L E W H O G E T U P

A N D L O O K F O R T H EC I R C U M S T A N C E S T H E Y

W A N T , A N D , I F T H E YC A N ’ T F I N D T H E M , M A K E

T H E M

G E O R G E B E R N A R D S H A W

08

Produced by Davidson Asset Management

Editor: Mhairi Clarke

We hope you enjoyed reading!

Please do feedback your views on the magazine to

[email protected]

HR & Hospitality Bites Issue 3 - April

Recruiting & HR

Transcript of HR & Hospitality Bites Issue 3 - April