The policy success of automatic enrolment (AE) is hard to exaggerate. Successive governments and regulators reversed the pension savings decline and massively increased the number of people saving. They have done so by channeling the power of inertia. As was recognised in the 2017 review of AE, the next great challenge is how to move these 10 million people from being inert savers to engaged savers.
The body of evidence from regulators and pension policy bodies suggests that written communications currently sent out by pension schemes and providers, mandated by regulations, often have limited impact on consumers’ level of engagement. The implementation of pension freedoms has given consumers greater control over their money, but also given them the responsibility for taking key decisions regarding it. If schemes pursue a compliance-focused approach to communicating with their savers about their pensions, then the risk is that consumers will continue to not engage with saving for their retirement.
Rather than just focusing on regulatory requirements, schemes and providers can segment their customers and target them with communications that are most relevant to them, and some firms are already doing so. This can be delivered in a meaningful way, which supports the wide range of other communications initiatives that are ongoing. The more a provider knows about its consumer base, the better placed it will be to do this, and there are relatively simple actions that could be taken to better tailor communications to people’s circumstances as they change over their life course.
Providers could seek to tailor their communications based on:
- Age groups
- Levels of pension saving
- Teachable moments
Each offers different ways to engage consumers through segmentation and tailoring. Giving consumers the right message, at the right time, over the right channel can drive profound change. In an ideal world all three methods could be used to create communication programmes that relate to the age of the consumer, the stage of their pensions journeys they are on, and which are delivered at the moment they are most likely to be successful. By communicating with consumers in a targeted and effective manner, providers can build on the success of AE to make sure that consumers are not only enrolled, but engaged.