Straightforward messages more likely to engage savers than ESG

Nest Insight, supported by Legal & General Investment Management, explored a commonly held belief that talking about responsible investment would widely engage disengaged pension savers.

In contrast with the widely shared view, the research — which targeted 35,000 unregistered contributing Nest members — found that a standard account activation email, with no mention of investment or responsible investing, resulted in higher open and click-through rates.

The research also concluded that the standard activation email had the strongest impact on member registrations, regardless of age, gender, salary or employment history, when compared with emails talking about responsible investment.

According to Nest Insight, these findings indicate that care should be taken with communications about responsible investment, depending on the target audience and the engagement objective.

For a disengaged audience, a straightforward message or personal communication may be a more effective prompt to engage people with their pension account for the first time, it noted.

Jo Phillips, director of research and innovation at Nest Insight, said the findings suggest a gap between the pensions industry’s interest in talking about ESG and the current appetite of some scheme members for hearing about it.

“However, it’s important to remember that the emails tested in this trial were designed to prompt the very first engagement among an unengaged group of pension savers,” she said.

“It’s quite possible that we’d see different results among savers who are further along their retirement saving engagement journey.”

The research found there were three instances where responsible investment messaging had an important role to play in engagement.

It drove engagement among people who said they care about ESG issues, and it drove engagement when framed around the idea of pension savings being an investment for long-term growth.

In addition, talk of an ESG investment strategy and how it produced better outcomes for members was more likely to build trust for a pensions provider.  

The research also concluded that the first step in the engagement journey could open the door to other engagement and action.

Among those who registered their account in the month following the trial, 85 per cent said they knew how much they contributed to their pension compared with 74 per cent who did not register their account.

Four in five (80 per cent) said they knew how much their employer contributed to their pension each pay period, compared with 69 per cent of those who did not register.

Meanwhile, more than half (52 per cent) of those who registered after being prompted to do so said they knew how much they would have saved in their pension by the time they retired, compared with 34 per cent who did not register the account.

Stuart Murphy, co-head of defined contribution at LGIM, said: “This research shows that we must adapt the way we talk to members, using straightforward language and focusing on subjects that matter to them.

“While terms like ESG and responsible investment may not always spark initial interest with members, we know they want to feel consulted about how their retirement funds will shape corporate activity, society at large, and how it can make a real difference to the planet.”

He continued: “At a time when DC pensions need more voluntary contributions, more understanding and, in general, more interest from members, it is clear that we, as an industry, need to do better in tailoring the way we communicate to ensure that we encourage them to fully engage with their pensions.”