With Pension Awareness Day fast approaching, experts explain how employers and a positive approach to retirement saving and communications can help.
Nearly 14 per cent of people retiring this year have not made provisions for their retirement, according to Prudential research published in March
The employer has a pivotal role to play in member engagement
Lydia Fearn, Redington
The pensions industry has continued to stress that the state pension will not be enough for most people to live on when they retire, urging people to save as much as they can for the future.
Pension Awareness Day, which takes place every year on September 15, aims to address this.
Launched in 2014 by campaign group Pension Geeks and provider Scottish Widows, it aims to alert the nation that it needs to save enough for retirement, by bringing the industry, employers and government together to help drive engagement.
Create a multi-channel comms approach
The campaign also focuses on helping businesses to prepare for their auto-enrolment duties and supporting them in engaging employees with their pension communications.
Karen Partridge, head of client services, UK and Australia at communications consultancy AHC, said that “a multi-channelled approach is the best way to engage people”.
She said this could include face-to-face communication, videos and modelling tools, adding that “adults need to be involved to learn”.
The idea of rebranding pensions is often cited as a possible solution to increase interest in saving for retirement.
“The word ‘pension’ isn’t a useful one,” because many young people “associate ‘pensions’ with old people”, Partridge noted.
Mistrust is an issue
In July, the Financial Conduct Authority published its Retirement Outcomes Review interim report, which highlighted mistrust of pensions as an issue.
Jamie Smith-Thompson, managing director of pensions advice specialist Portafina, said the media have focused over the years on the “juicier aspects of pensions”, such as attempted scams and investigations into value for money.
He said: “This constant stirring of bad news has left many in the public confused and distrustful of one of the most important and tax-friendly methods of saving for your future.”
The state pension on its own is not a lot of money, and people need to concentrate on “the idea that it is never too early or too late to start saving – it all adds up”, Smith-Thompson added.
Employers must engage
Lydia Fearn, director and head of defined contribution at consultancy Redington, argued that “the employer has a pivotal role to play in member engagement”.
She explained that “employers have an overarching duty of care to their staff”, noting that the introduction of auto-enrolment has made the employer a natural first port of call for questions and issues that might arise for members.
“A clear and structured communication strategy from employers can play a big role in boosting member engagement, especially when coupled with educational initiatives such as workshops and training sessions,” Fearn added.
She said that many people are still unaware that simply saving into an auto-enrolment scheme at current contribution rates will be insufficient to provide a comfortable amount of income at retirement.
Life events key to engagement, report finds
Moving house, getting a job or starting a family could be the best moments to get people saving, a Pensions Policy Institute report says, but stresses the risks of engagement and continued role of default options.
Fearn said: “It is important that we work with government bodies, the media and stakeholders to drive home the point that additional saving is crucial to guarantee a financially secure retirement.”
Adopt a positive approach
Paul Waters, head of guided outcomes at consultancy Hymans Robertson, also said employers are paramount when it comes to raising awareness.
“Employers have got the best opportunity to make a difference here,” and “can positively influence savings behaviour far more effectively than the government can”, he added.
It is not all doom and gloom. Waters said that, in general, “recognition that you need to save for retirement”, certainly among people who are employed, “is more widespread than most commentators would suggest”.
Indeed, research conducted by provider Aegon has shown that over 5.5m people are saving more as a direct result of the introduction of freedom and choice in April 2015.
Rather than comment on how people are generally not saving enough, he said: “We need to be more positive,” and provide solutions and highlight the main benefits of saving for retirement.
