Back to the future: modernising communications in pensions
What can the industry learn from other sectors and how can organisations ensure they are helping to guide their employees to financial security in later life?
Saving for retirement has never been more important than today. The industry’s move away from defined benefit pensions, combined with the UK’s ageing population, means the onus is increasingly on the individual saver to take control of their own future, and make the right financial decisions early on.
Worryingly, this message about the importance of saving for the future doesn’t always filter down to consumers. In fact, the Savings Psyche of the UK research, a major study conducted by Willis Towers Watson and the University of Nottingham Business School, reveals that Brits are prioritising short-term saving – such as holidays (55%) – over long-term saving for retirement.
Considering the way in which much of the industry is communicating with consumers about their pensions, this shouldn’t come as much of a surprise. While consumers have become used to being dazzled by brands competing for their attention, much of the pensions industry has not ‘moved with the times’ when it comes to engaging them with their savings. In today’s online age, traditional methods of communication, such as brochures and paper statements, are likely to play second fiddle to their increasingly eye-catching digital counterparts.
Employers, with their unrivalled access to the UK’s working population, are in a unique position to help encourage long-term savings.
Making pensions accessible
Assuming jargon-filled statements are creating, or sustaining, meaningful engagement is a fallacy. Looking at the complex behavioural theories underpinning saving attitudes and strategies in a wider context is a real necessity. It is this that will allow us to become an enabler of pension saving decisions.
In recognition of this, we are seeing a small number of providers, including LifeSight, focusing their attention on making long-term saving more accessible to consumers. The creation of user-friendly online portals for members, something that has long been standard across the banking sector, is a key example of this. This development, allowing consumers to make strategic and administrative changes in one convenient location as well as monitor saving progress across all devices, has helped demystify pensions.
At LifeSight, to encourage members to remain engaged with the platform, we send email prompts tailored to the individual’s level of activity and have introduced a ‘My Progress’ tracker for key member decisions such as beneficiary nominations.
Access to an online portal like this, where information is simply laid out and explained, goes some way in removing barriers to sound financial decision making for employees. Being able to easily track their pensions enables users to become more involved in the process. We would argue this involvement should not only be possible but is essential for defined contribution provision to succeed.
Relatability is key
Relatability is another subject to be addressed in order to change the prevalent perception of pensions as a future concern. Among more ‘pressing’ financial priorities, pensions often fall to the bottom of the list.
For this reason, we introduced LifeSight Age, an online experience that illustrates not just the age at which a member may be able to afford to retire but also how they can influence this through simple contribution and investment decisions. A tangible, relatable metric like age helps users become more interested and invested in their saving decision and can nudge them into action by demonstrating how their current behaviour could affect their future. Our experience is that users are more likely to change their behaviour to reach a positive outcome in the future when they see a relatable metric.
Using video for employee engagement
To fulfil an aim of enabling the largest number of consumers to maximise retirement savings, the industry will need to continue innovating and using the latest technologies. Video communication is one creative way in which some schemes have started engaging employees and indeed has taken off so quickly it is now seen as best practice by many.
LifeSight’s suite of videos, for example, forms a key part of its communications to provide relevant information to members. Each video encourages them to think about their pensions and wider savings in new and exciting ways. The videos ensure the key messages communicated provide maximum value to someone saving for their future. The more tailored the videos, the more likely it is that the user will think about their pension investments and their future retirement and take the appropriate action.
We are also excited about our video benefit statements. Meaning that instead of just receiving a flat, static statement, LifeSight users will get a personalised, engaging video informing them of their current pension savings and other important information.
A number of large providers are introducing significant innovations in the pensions communication sphere. Having economies of scale, which we are seeing through consolidation in the market and a growing master trust market, means some exciting new developments are coming through to support saving and making the most of members’ investments. Making communications engaging and meaningful is essential to helping employees understand the importance of seriously saving for their future, starting now.