Does your pension scheme work for younger savers?

In fact, nearly a third (30 per cent) of those aged 22-29 working in the private sector were saving into a pension in 2013, up from 24 per cent in 2012, according to government figures – making it the largest growth in membership among any age group.

With this demographic growing, one might expect to see efforts to increase representation of young people as well as targeted communication strategies, but some governance experts predict schemes struggling to keep up with the pace of change.

While some progress is being made with communication – the ‘gamification’ of engagement, for example, could make big inroads here – generating a wider interest among younger people in their workplace schemes is easier said than done.

Richard Pettit, senior associate at law firm Burges Salmon, said member-nominated trustees are in general older people who are closer to their pensions.

You might have to think about doing it in a way that doesn’t come naturally

Mark Hodgkinson, Muse Advisory

“That is something that it would be useful for schemes to challenge and to address because younger people have got a lot to offer,” he said.

Of course, it is difficult to get people’s voices heard if those people are not putting themselves forward. Pettit said while schemes are not pushing this point at the moment, this could change as a result of a news agenda that could make young people’s input more crucial.

Mark Hodgkinson, director at governance specialists Muse Advisory, agreed that representation by younger people needs to rise as their membership numbers increase.

“Particularly in a defined contribution world, it is really important that those who are governing the scheme have a good understanding of what the needs of the younger contributors are,” he said.

But Hodgkinson added that this group’s broader interest in pensions – whether as a member or a trustee – hangs on more than just a simple question of to save or not to save, as their financial demands are much more complex.

“I think it’s down to those competing demands; they’ve only got so much cash but rather than spend it or save it, it’s spend it, save it, save for a house, or pay down my debt,” he said.

Outside the comfort zone

Hodgkinson added the way younger people perceive and receive information is different to that of the largely white, middle-aged decision-makers that make up the pensions industry.

And Hodgkinson stressed communication channels, perhaps currently unfamiliar to those decision-makers, will prove very important. “You might have to think about doing it in a way that doesn’t come naturally,” he said.

Giles Payne, director at HR Trustees, said there are massive demands on the incomes of younger people and they should be treated in communications as sensible people making choices about how to save, not whether or not they would like to save into a pension.

“The key message to get out there is if you contribute to a pension, your employer will be contributing too, and that makes it a very valuable savings vehicle,” he said.

But the success of the savings message to younger people could hang on the delivery, an area in which Richard Butcher, managing director at professional trustee PTL, said the industry is “clunky”.

He said communications is comprised of old material and language most suited to readers of broadsheet newspapers, adding: "That’s not very engaging for 99 per cent of the population, let alone for young people”.

Butcher added: “One of the challenges for us as an industry… is to not be Luddites when it comes to the language of technology that we use to communicate with people. We have to be far more creative, we have to be open minded and we have to be willing to accept ideas.”