DWP and Nest Insight launch research into impact of Covid-19 on self-employed savers

Nest Insight and the Department for Work and Pensions (DWP) have announced new research examining the financial impact of Covid-19 on self-employed people, in turn postponing ongoing self-employed messaging trials.

The organisations had expected to launch the next round of research, which would involve technology-based trials of interventions designed to make it easier for self-employed people to save via platforms they already use, next year, although this has now been postponed in light of the pandemic.

They explained that the Covid-focused research announced today (16 September) would allow them to assess whether the technology-based trials should focus solely on retirement savings, or whether emergency savings mechanisms should also be included if there is evidence that self-employed people feel they need to build up liquid savings.

The research was announced alongside the findings of the latest stage of research around self-employed saving, which aimed to understand the effect of messaging developed specifically around the characteristics, needs and context of self-employed people on engagement with pension saving.

The report, Talking with self-employed people about retirement, revealed that tailored communications have the potential to engage self-employed people with retirement saving, with open rates for all four messages across both sample populations performing above benchmarks for comparable email campaigns.

However, some messages, such as the palatable contributions email, saw a stronger level of engagement in terms of open rates and accessing their Nest pension account.

The report stated that this suggests that different messages may prompt differing levels of engagement, with palatable contributions messaging potentially encouraging deeper engagement among those who open an email and click a link to go to the website.

The trial messaging included a total of four key messages around tax relief, loss frame, palatable contributions and flexible contributions, which were developed through a prior Nest Insight research programme, and sent to members of both the Independent Professionals and the Self-Employed (IPSE) and Nest Corporation.

Whilst there was no significant differences in open or click-through rates for the respective messages by gender, there were “notable differences” by age, income, existing pot value and existing contribution pattern.

In particular, older age groups were more likely to open the tax relief email, with over-50s recording a 56 per cent open rate, compared to 45 per cent for those aged 30 to 39.

The tax relief email also had the highest open rate in the IPSE trial, and was a “statistically significant” level higher than palatable contributions, whilst within the Nest trial there were no statistically significant differences in the open rates for memberships.

The report noted that the IPSE membership comprises of higher income earners on average than Nest’s membership, arguing that this message may therefore be “more salient” because they stand to gain more from higher tax relief or because they are more aware of the benefit as higher-rate tax payers.

Meanwhile, the Nest trial revealed that those who contribute regularly to their pension had higher open rates across all four emails compared to those who have been contributing irregularly or had not contributed at all in the past two years.

The flexible contributions and loss frame messaging appeared to resonate more with those who have stopped making pension contributions for at least two years, with a higher click-through rate.

However, the Nest trial also found that a larger pension pot value, “over and above all other factors”, was the strongest determinant of whether a self-employed person was likely to open the emails.

The report clarified that the only exception to this pattern was that higher proportion of those who have been making irregular contributions into a pot with a relatively lower value opened the palatable contributions messaging than those who have been doing so into a pot with a relatively higher value.

The organisations also acknowledged the potential limits of messaging alone in prompting a behavioural change among the self-employed, noting that barriers to pension saving are “particular to this population”, such as their often irregular and uncertain income.

Despite this however, the initial trials found that self-employed Nest members who were already making regular pension savings and received any of the trial emails were marginally more likely to increase their contributions in the three months after receiving it compared to self-employed members making regular contributions who didn’t receive a trial email.

Commenting on the findings, Nest insight director of research and innovation, Jo Phillips, emphasised that the programme had found "encouraging results", noting that whilst emails alone cannot address the issues, the findings suggest that "relevant, targeted communications" could potentially boost engagement.

She added: “Our research programme is based on the principle of designing solutions that specifically fit the needs and context of self-employed people, and we know that for many households that context has changed as a result of the Covid-19 pandemic.

“We believe it’s vital that we assess the impacts on different sub-groups of self-employed people, and if there’s evidence that people’s savings orientation has changed - for example, if they feel they need to build up liquid savings before considering saving for retirement - we will look to adapt our technology trials accordingly.

“We hope that the next round of trials, combining what we’ve learnt from the messaging trials and Covid-impacts research with a practical focus on specific behavioural interventions, tools and solutions, will enable us to identify ways to meaningfully move the dial over the longer term.”

Pensions Minister, Guy Opperman, added: “We are committed to boosting the retirement prospects of millions of hard-working self-employed people, including younger and lower-paid workers.

“The self-employed are a highly diverse population and we recognise that one solution will not necessarily fit all. That’s why we’re trialling various approaches to help them plan ahead financially for later life.

“The valuable insights gained from these messaging trials, along with the forthcoming research into the financial wellbeing impacts of Covid-19, will help inform future trials and policy. I look forward to seeing the positive interventions that follow.”

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