Martin Palmer, head of corporate pensions marketing at Friends Provident, advocates innovation to attract the attention of those not saving for retirement

In July, the Pensions Regulator issued a statement declaring its aim to engage employers and ensure members are informed about their retirement choices - initiatives that the watchdog hopes will help achieve a good outcome for members of defined contribution (DC) schemes. At the same time, the Regulator also published the first edition of DC Trust - a presentation of scheme return data.

These two publications are a positive development. Greater recognition of the importance of DC provision from the Regulator is a welcome step, not least given the tendency to believe the Regulator is preoccupied with limiting the growth of failed DB schemes which qualify for entry into the Pension Protection Fund.

For most workers, DC provision is fast becoming the only game in town. So while DC pensions are criticised for their limitations, the reality is they are here to stay. By publishing annual statistics, it appears the Regulator will now closely monitor trends of the number of workers with DC arrangements.

Cold stats
The data the Regulator published came from two sources. Firstly, any employer setting up a scheme with two or more members must register certain information. Secondly, they must complete an annual scheme return.

The statistics reveal there are around 5,800 DC schemes with 12 or more members, of which 78 per cent are trust based and 22 per cent hybrids - a total of some 2.37 million members. The report estimates that at the end of 2008 there were 3.2 million members in contract-based schemes, and 14 million with individual personal pensions. By way of contrast, there were 8.8 million members in private sector DB schemes, a significant proportion of which are not accruing future DB benefits.

Of course, these figures do not tell the full story; members in DC schemes need to be far more proactive to ensure they maximise their pension outcome at retirement.

Gaining employee attention
So while the Regulator is well intentioned in its desire to engage more employers, what exactly does it propose to do?

Its current plans appear to focus on occupational schemes, but I believe they should extend to contract-based schemes too.

In particular, the Regulator states that it intends to review scheme literature and processes and make sample literature available to trustees. Important, no doubt, but our research consistently confirms that 'one-size-fits-all' paper-based communications do not attract the level of interest required to drive-up membership.

More importantly still, on their own they fail to deliver ongoing recognition of the value of saving for a pension.

According to research that Friends Provident published last month, as many as 27 million Brits today are almost clueless about saving for retirement. As an industry, therefore, we must see this as an urgent opportunity to educate people as to why they need to take a more active role in saving for a pension.

It's time for the pensions industry to think outside the current box.

Changing the record
Behavioural science tells us a great deal about how people react when faced with what they regard as complex financial decisions. Historically, we hand out too much information which is dense and largely irrelevant.

Firstly, we must be clear in our strategy to employers and get them on board. Employers should be receptive: they make considerable financial commitments to their schemes, so expect their employees to appreciate the benefits of the scheme.

Then, to get the consumer's attention we must personalise the message and the method of delivery. This means segmenting the target audience to ensure the content is relevant and understood.

If the Regulator really is willing to push forward on this agenda, and aid the segmentation process as well as communicating the broader message, then that really will be a positive step for members of DC schemes.

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