How schemes can turn people’s fear into action
Detachment, fear, and complacency - the main attitudes to pensions identified by DWP research¹ into member engagement with workplace pensions, and a stark reminder of the challenges facing any pension scheme or employer with the ambition of engaging members in planning for their future.
But these attitudes are also clues to how we can overcome a lack of engagement with effective communication.
Inspire ownership
Detachment indicates a lack of control and ownership. Ignition House research for SEI found that 82% of people like to feel in control of their finances, but only 18% felt they were in control of their pension; and 74% reported low/no ownership of their pension – with the feeling more acute among women (82%) than men (65%).
Auto-enrolment means most people haven’t taken any positive action towards saving for a vague outcome, decades in the future. It’s no wonder that achieving a sense of ownership is a challenge.
In this context, ownership is an emotional connection, not knowing you have a policy document in the bottom drawer. To paraphrase Maya Angelou, people will forget what you say but not how you make them feel.
But generating an emotional response from communication is difficult without creative input; organisations can spend millions on pension contributions but nothing on specialist communication support. Allocating a small proportion of the overall budget to communication can transform levels of engagement – and multiply the value for money for employer, scheme, and member.
Making it personal and relevant makes it matter. Pension audiences are diverse, so adopting a single approach to engagement is unrealistic. It’s vital to consider different needs, values, interests, and demographics to make the message resonate.
For example, the priority of pension saving varies by life stage. Those closer to retirement may already have a heightened awareness of their pension; whereas younger employees will invariably consider retirement planning in the context of other shorter-term financial objectives – particularly relevant in the current cost-of-living crisis.
Communications should reflect this, and organisations can harness technology and employee data to drive a tailored approach to communication.
Dispel the fear
Fear can come from lack of understanding. The pensions world is littered with jargon, acronyms, and complexity. In fact, recent research revealed that much of the investment-related content produced by fund management firms has a readability score closer to academic research than financial media, with output from fund firms comparable to reading A-Level study material[1]. Distilling complex terms and concepts into more accessible language is non-negotiable.
When it comes to communication, simplicity is key. Siegel and Gale’s Simplicity Index shows the profound impact of simplicity on aspects, such as trust, innovation, advocacy, and retention. So, use straightforward, accessible language and visual support such as infographics and bitesize video to bring the content to life.
That said, good communication can only go so far; confidence in the fundamentals of retirement planning is an essential foundation before you can inspire and empower members to take control of their future. Consider incorporating financial education to help build knowledge, understanding, and confidence in money generally and pensions specifically.
Call to action
Auto-enrolment has been great at harnessing inertia to get people saving for their future, but it’s inevitably a factor in the reported complacency regarding pensions. At some point everyone has to take some action in respect of their pension; helping members do the right thing at the right time is one of the big challenges in pension communication.
For example, it’s widely acknowledged that current minimum contribution levels aren’t sufficient to achieve an adequate retirement income for most people, so most pension members will need to save more if they’re to avoid a disappointing retirement.
The “Pay Your Pension Some Attention” campaign recognises that current economic conditions aren’t necessarily the best time to encourage long-term saving, so it highlights other steps people can take to manage their pension instead.
This action-oriented approach encourages members to get actively involved with their pension and empowers them to take control. Be very clear about what steps members can take to change their future and clearly signpost how to do so.
There’s no doubt that pension schemes face significant challenges when it comes to engaging members, but these can be overcome and detachment, fear, and complacency can be turned into engagement, confidence, and action.
Mark Pemberthy is benefits consulting leader at Buck, a Gallagher company.
