How can organisations deliver a vibrant financial culture that works in the interest of consumers?
Within the pensions industry, we are seeing a move towards increased individual responsibility for our own financial futures. With the rise of defined contribution plans and pension freedoms, the onus is, more than ever, on the consumer to accurately and responsibly manage their long term savings. However, many people are reluctant to engage with financial matters and deal with the reality of their finances head on which is impacting the wellbeing of the UK workforce. Our latest Global Benefits Attitudes Survey found that employees who are expecting to work longer are less healthy, more stressed and less engaged than those who expect to retire earlier.
As an industry, it is our duty to ensure that we make it easier for people to engage with and save into their pensions. The better grip they have on their savings and the options open to them at the retirement, as early on as possible in their career, the less likely they are to be in a position where they cannot afford to retire when they want to.
Tailor to the individual
Organisations need to grab the bull by the horns and ensure their employees have access to the right tools and information to help them make informed decisions when it comes to saving into their pension and planning for their retirement. However, we know making information available on its own is not enough. Personalisation is an important factor (no two people are the same) and increasingly the pensions sector is moving away from a one size fits all model. Pension services need to be tailored to individual customers’ wants and needs if they are to be as effective as possible and work in the best interest of savers. By using tailored communication, you will automatically see an increase in engagement amongst your employees.
Meeting the needs of the modern consumer
Modern consumers are used to accessing information on the go, at the click of a button or swipe of a phone. Information regarding their pension shouldn’t be any different. It’s important that customers have access to their pension information anywhere, anytime and on any device. Not only do most of us have busier lives than ever before, we also expect instantaneous access to information, whether this is the content we consume daily on our phones, or our own personal information, like our bank balance. Giving consumers access to their pension information on the move means they can check the status of their savings when it suits them.
In turn, this ease of access should help increase awareness of their savings as they see their fund go up (and potentially down) and enable them to make smarter, timely financial decisions, seeking out expert advice where they need it and becoming proactive rather than reactive savers. There is every reason to ditch the mentality that reviewing pension information is (at most) a once a year admin task.
All organisations have a role to play in helping employees do this. Introducing employees to the world of pensions and providing them with engaging, interactive information on saving for retirement is crucial.
Sticking to the A, B, Cs
It’s important the information on offer is jargon free and easy to navigate. The content needs to work not only offline in traditional booklet and letter form, but also online as interactive FAQs and saving tools. For many, particularly younger savers or those just beginning to put money into a pension, the pensions sector can be extremely confusing. Most people won’t know the difference between various types of pensions and investments; as a result, they are going to need everything provided in the simplest of terms. Failing to do so could result in consumers switching off and neglecting to deal with their savings altogether – this is the worst-case scenario for everyone.
Giving pensions 110%
Information shouldn’t just be delivered at arm’s length. Companies should seek to help employees with getting some support that isn’t online as well. There are such a range of options available now from one-to-one guidance and/or advice sessions to larger pension workshops. These needn’t be expensive; Pension Wise has a free service for the public and group pre-retirement workshops can be cost effective. They help to engage individuals with preparing for their retirement and ensure they set time aside to give it some serious thought.
Giving employees the chance to ask questions to an expert and have some dedicated time with someone who knows the industry and various courses of action available to them could be invaluable to their pension planning.
Finally, employers should also make sure employees know where to go to get independent regulated financial advice if they need it.
As the industry puts a greater emphasis on individual responsibility and freedom, it is our duty to do all that we can to enable savers to engage with and make the most of their pensions. So far, the sector has been slow to adapt to changing consumer demands and expectations. Luckily we know exactly what it is consumers want – personal, easy to digest information they can access on the go, alongside the opportunity to easily access guidance and advice should they need it. Bearing this in mind, organisations can work with providers and advisers to ensure they are delivering a vibrant, supportive financial culture that works in the interest of consumers and benefits the future of the industry.