Increasing engagement in pensions is something we read about weekly – in the industry press. Whether it’s digital solutions or net zero… there is a continual cycle of claims that will help solve the engagement crisis. But if we take a step back and look at tried and tested, action driving marketing strategies and tactical activities, along with the abundance of behavioural science learnings (from pensions and beyond). It’s clear that the journey from inertia to engagement is unlikely to be an overnight success story.
Low engagement is by design. In the good old days of defined benefit schemes – engagement was not necessary. Your pension pretty much looked after itself. When the time to retire came your biggest decision was whether to take a lump sum or not… then a regular amount got paid to you (fairly simplified view…but you get the gist). As DB declined, there was not an equal rise in DC until automatic enrolment legislation came into force. A success story for pensions with over 10 million new pension savers. A success that was built entirely on inertia. We didn’t want to engage people too much for fear of increasing opt out rates. And we did our best to maintain this – even moving the effective date for increases to minimum contribution rates from October to April. So it would coincide with the new tax year and people wouldn’t notice the effect of ‘phasing’ in their take home pay. Success continued…depending on your measure of success – obviously!
Some key facts and figures that demonstrate both the success of inertia and the size of the problem:
But government and the regulators want this to change. From active retirement choices to understanding costs and charges – the deluge of current consultations puts the unengaged member front and centre. And expects them to not just passively engage but also make active informed choices. Actions and outcomes that are diametrically opposed to a sector predominantly built on inertia.
For a term that is so widely banded about – do we actually know what we mean by it? Most schemes will have engagement measures that are bespoke to them, for example:
All of these (and many more) can be used to measure engagement statistics. But what about a standardised industry measure? Do we have one? How can we measure the move from inertia to engagement without a benchmark and common approach?
When we talk about engagement we always assume DC – and the savings crisis usually refers to people who only have DC. But DB engagement is key for scams prevention, adequate savings and the success of the dashboard. There’s also GMPs, McCloud, de-risking, consolidation and TCFD requirements – the amount of member communications has never been greater! But broadcast messages don’t build engagement.
So, here’s our problem… we have a lot of people saving, that don’t know they’re saving and many aren’t saving enough. We have plenty of industry drivers focused on getting members to make active choices and increase communications. And we have a barrage of complex rules and nuances that surround pensions.
We want to move from inertia to engagement, but without a common measure of engagement, a benchmark or a goal…it’s not a match made in heaven! So, where to start…? A framework for communications…?