Need to know:
- Employers need tailored, practical messaging to reach employees struggling with pressing financial concerns.
- A multi-avenue approach will help catch a wider range of employees’ attention, but video content and digital strategies are good starting points.
- In order to cut through the noise, people need to see their pensions as real, rather than a far-off, intangible concept.
As a large proportion of UK employees look down the barrel of rising costs, many might be tempted to lower their pension contributions to free up cash. However, it is still incredibly important to get employees thinking about their long-term stability.
In order to engage employees and avoid sounding irrelevant, any message around pensions needs to address and accept the current economic context.
Steve Goddard, chief executive officer (CEO) of Pensions Playpen, says: “Any contribution is better than none. There’s plenty who advocate that the default should go higher, but that’s a bit of a pain when you’ve got high inflation, salary pressures and everything else. There’s an education piece there where people should try and do more, but have got to be practical.”
Kate Smith, head of public affairs at Aegon, adds: “At the moment, it’s all about trying to keep people in pensions, not necessarily about increasing their contributions; that wouldn’t be the right message at the moment.”
Pensions communications in 2022 should, therefore, focus on convincing employees not to lower their contributions unless they really have to. One tactic is to focus on the potential loss of ‘free money’ in the form of employer contributions and tax benefits, in order to pique people’s interests, says Smith.
Employers should look at the whole financial wellbeing picture, says Kate Whitley, client services director at Caburn Hope.
“[They have] got to listen to people, first of all, and understand what their pain points are,” she explains. “Then, show them how their benefits could help long-term savings, but also acknowledge the short-term. We’ve got a lot of clients that are reviewing their positioning in this way, and finding that some employees are surprisingly more engaged in pensions than ever before, because they are so focused on the importance of their financial wellbeing.”
Helping people overcome worry about their immediate financial situation can also free them up to consider the long-term, adds Whitley. “[Employers] can’t just go straight into retirement savings without acknowledging what’s going on right now, because that would just seem inauthentic when employees are struggling.”
Kirsty Moffat, [defined contribution] DC investment consultant at Hymans Robertson, adds: “The main message really is that employees shouldn’t forget about their pension, and especially when they’re young, as that’s the most important stage. But the challenge is balancing that message of this being a great thing for the future, with the pressures at the moment.”
Employers should also consider factoring in employees’ values. For example, introducing the subject of environmental, social and governance (ESG) can make pensions more relevant, and help employees see them as a tangible force for good now, with a pay-off down the line.
“ESG considerations are are really being incorporated into the majority of the UK master trust default strategies now in some form or another,” explains Moffat. “We’re really trying to work with our clients to communicate that to all members.
“Pensions are one of those things that young people in particular might not think about at all, whereas if [they are] able to look beneath underneath the bonnet of what they’re invested in, it can be a huge way of engaging these members. They might even pay more into their pensions as a result.”
While tailoring the message is important, cutting through the noise also means considering the medium. Employees are unlikely to engage with lengthy paper documents, for example. It is important to simplify communications and cut out jargon.
Employers could use their new starter packs, but rather than supplying dense packets, include links to key information, says Moffat. After this, employers can choose key milestones around which to centre further nudges. Breaking employees up into targeted cohorts can also avoid adding to the noise with irrelevant information.
Employers should ensure they use a diverse spread of media. An organisation with a heavily office-based workforce might consider putting up posters, provided they are simple, catchy and with a clear call-to-action, while remote businesses might focus more on utilising their intranet to catch people’s eyes. Whatever the starting point, the key is variety and depth.
“Content is digested differently by each person: some like to read, others like to watch, some like audio, and some like to talk to someone, so every pension communication should have a multi-media approach,” says Dan Mills, partner at Lemonade Reward.
Aegon has found video summaries to be particularly effective. “They are fun, personalised, and short,” explains Smith. “That’s the sort of thing we think cuts through the noise.”
“If I gave [an employee] a 28-page statement, [they are] going to glaze over,” adds Goddard. “But a two-minute video can deliver a lot more value to that member to understand where they are. Employers should be using video content and embracing technology a lot more than they are at the moment.”
Visual aids such as infographics and modelling tools can offer the chance to directly interact with the message, playing around with different scenarios and seeing, in a simplified form, how current savings might manifest down the line. This might also take the form of gamification through point scoring or ratings, says Goddard.
This all comes back to the idea of making pensions real, Moffat explains: “Give employees an idea of what they’re able to afford in retirement based on what they’re able to save. Look at things like holidays: the difference between being only able to take one in the UK a year, versus a couple abroad. Those are the sort of things that that really drive it home to pension savers.”
In order to cement this reality, apps that reflect the ones staff might use for mobile banking can help bring pensions into the modern age, and sit them alongside any other form of personal finance. Taking a digital-led approach also means that information is available 24/7, cutting through the noise simply by working with an employee’s schedule.
“We need to replicate how an employee consumes other personal finances, so they need to be able to access their statements online, model scenarios, and see all the options available,” says Whitley. “That is what what audiences are used to these days.”
Smith adds: “Digital first is probably the way to go, because [employers] can reach more people, make communications more regular, bite-sized and visual. [They] can use more imagination.”
Going forward, it is likely that this app and tech-based form of communicating will evolve to include widespread use of chatbots and artificial intelligence (AI).
“I would encourage employers to start using technology to marry the short and long-term,” says Goddard. “It’s not just about [a] pension, but about banking and savings, it’s alongside everything else.”
There are many ways to communicate about pensions, with fresh ideas and strategies emerging every day. There are some staple truths: the need to remove jargon, use diverse media, keep things simple, and relate pensions to an employee’s current reality, but it is important to remember that each workforce is different.
Mills concludes: “The only way to find out what resonates with your audience is to experiment and test. There isn’t a silver bullet. Assuming we are not starting from scratch and some communications have already been sent, data is [an employer’s] best friend. Analyse past trends: did a newsletter generate HR email contacts? Has an email spiked web traffic? By knowing what has worked and what hasn’t, [employers] can tweak [their] strategy over time.”