Pensions industry must rethink communication strategy to improve engagement

The pensions industry needs to rethink the way that it communicates with members to improve engagement and help them understand their savings, suggested a panel of experts.

Discussing industry to member communication at a recent Defined Contribution Investment forum, Pensions and Lifetime Savings Association chair, Richard Butcher believed that the industry needed to speak to members in terms they could understand.

He said: “What we’re focused on at the moment is getting them to understand the wrong things. We’ve got to get them to understand the right things.

“They don’t need to understand their fund value, they need to understand whether they’re going to achieve their aspirations in retirement, whether they’re going to have the lifestyle that they expect or want to have when they get into retirement.”

Young Money Blog founder, Iona Bain, warned that the long-term risks were high if the industry does not improve on its communication with savers.

She stated: “There is a huge risk that we end up alienating a generation, whereby they feel they have been misled into saving for something that they didn’t fully understand.”

Boring Money founder and MD, Holly Mackay, believed that members should be assisted in understanding whether their scheme offers good value, rather than the costs.

She argued: “I think what most people want to know is, saying from an independent point of view, here’s how this thing stacks up, here’s how it rates.

“So, if this was a restaurant and cost was measured out of five, is it a one pound sign or is it five pound signs? How does it stack up against everybody else? And I think that’s something that’s missing.”

Participants in the forum also highlighted the need to take advantage of technological advancements, such as the pensions dashboard, to help improve member engagement.

As part of the wider adoption of technology, as seen in many other industry sectors, data was seen as a key device in helping savers comprehend their pensions and assisting providers in understanding their members.

Nest director of customer engagement, Mark Rowlands explained: “A truly personalised experience is far more effective. People share their data in so many other public forums these days; why not with financial services companies?

“Once pensions providers understand their customers in more detail, they can engage with them far more effectively.”

Butcher agreed: “Pensions exist in this much wider financial eco-structure. So, we have to, first of all, see what we’re doing in the context of that wider eco-structure, and then we have to make it easier for the member to input data so that we can see what we’re doing in context.”

A simplification of the way the industry communicates was also highlighted as an important step, as Mackay detailed: “Bearing in mind that overall standards of financial literacy are low, it does not make sense to start talking to people in investment language.”

Rowlands concluded: “I think over the next couple of years, the UK pensions landscape will look fundamentally different from what it looks like today, because I think scale will drive a whole different set of solutions and behaviours. The future looks really positive for pensions in the UK.”

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