Millennials' willingness to save for retirement is being jeopardised by a “lack of digital innovation”, according to research by ShareAction.

The responsible investment charity’s report, Pensions for the Next Generation: Communicating What Matters, is urging the pensions industry to “radically rethink” its communication with younger workers.

Minimum contributions into workplace pensions are set to rise from 2 per cent to 5 per cent of salaries in April, and ShareAction believes opt-out rates will grow unless pensions are made more “aspirational and emotionally engaging”.

ShareAction chief executive, Catherine Howarth, said: “Our research finds a huge opportunity being missed to get people feeling more positive about their pensions and about saving in general. For young people, it’s essential to make the case that their pension is already making a positive difference to their lives.

“It’s not all about waiting until retirement. The savings crisis remains acute in the UK but our report finds low cost opportunities for the pensions industry to make a real difference.”

The report says that providers should use tailored digital communication for it members, to show how their pension is “relevant to the economic, social and environmental issues that matter directly to them”.

According to the report’s findings, 84 per cent of pension scheme members say they would prefer to use investments to encourage companies to operate responsibly.

Furthermore, ShareAction suggests providers should encourage millennials to do their financial planning on a smart phone, with only two of the nine largest UK pension providers offering an app.

Abundance Investment joint managing director, Bruce Davis, said: "For too long the pensions industry has acted like English people abroad, as if shouting more loudly and more slowly was the only way to get people to engage with and understand financial decisions.

“We welcome this report which provides solid evidence that people do understand the power of their pension pot to create not only a more secure future for themselves, but a more sustainable world to spend it in.

“This report also clearly demonstrates how auto-enrolment could be the key to unlocking ethical investment for mainstream investors, if only the providers would listen to the demands of their members to know how and where their money is invested."

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