'Straightforward' messaging more effective than ESG-focused comms

Straightforward messaging and personalised communications may be a more effective engagement tool than responsible investment messaging, research from Nest Insight has suggested.

The research, which was supported by Legal & General Investment management (LGIM), looked at the impact of responsible investment messaging amongst savers who have never logged into their pension in a behavioural email messaging trial with 35,000 Nest members.

It found that a standard account activation email, with no mention of investment or responsible investing, resulted in higher open and click through rates and the strongest impact on member registrations when compared with emails talking about responsible investment.

This challenges the often raised assumption that responsible investment communications could be a good engagement tool.

Instead, the report suggested that for a disengaged audience, a straightforward message or personalised communication may be more effective to prompt people to engage with their pension account for the first time.

The report also emphasised the importance of this ensuring members are registered, as it found that 88 per cent of those who registered their account in the month following the trial said they knew how much they contributed to their pension, compared to just 74 per cent of those who did not register.

In addition to this, 80 per cent of registered members said they knew how much their employer contributes to their pension each pay period, compared to 69 per cent of those who did not register their account.

More than half (52 per cent) of registered members also said that they knew how much they will have saved in their pension by the time they retire, compared to just over a third of those who did not register their account.

However, the report found that there are still areas where responsible investment messaging can play a key role, such as driving engagement amongst those savers who specifically say they care about environmental, social and governance (ESG) issues.

It also suggested that responsible investment messaging can help people engage with the concept of investment or build awareness that pension savings are invested and build trust in pensions and scheme providers.

Nest Insight director of research and innovation, Jo Phillips, commented: “Our research findings suggest that there could be quite a wide gap between the pension industry’s interest in talking about ESG and the current appetite of some scheme members for hearing about it.

“However, it’s important to remember that the emails tested in this trial were designed to prompt the very first engagement among an unengaged group of pension savers. It’s quite possible that we’d see different results among savers who are further along their retirement saving engagement journey.

“It’s also clearly true that some people are highly motivated by ESG issues, and awareness of the relevance of these to pension saving is growing.

"If communications can be tailored and targeted to those who care about ESG issues, then the research indicates that these messages could indeed be effective.

“But personalisation is key. Information about responsible investment should be shared with those who want to find out more, but in a way that isn’t daunting or off-putting for others."

However, Phillips also emphasised the need for a better understanding as to how the patterns in this trial vary in different settings, such as with different target audiences, in the context of different schemes and at different touchpoints.

Adding to this, LGIM co-head of DC, Stuart Murphy, commented: “As an industry we have a critical responsibility to find ways to educate, support and empower our members on the benefits and impact of their pensions savings on society.

"This research shows that we must adapt the way we talk to members, using straightforward language, and focusing on subjects that matter to them.

“While terms like ESG and responsible investment may not always spark initial interest with members, we know they want to feel consulted about how their retirement funds will shape corporate activity, society at large and how it can make a real difference to the planet.

“At a time when DC pensions need more voluntary contributions, more understanding and in general more interest from members – it is clear that we, as an industry, need to do better in tailoring the way we communicate to ensure that we encourage them to fully engage with their pensions.”

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