As of May 2019, global insurance and investment organisation Starr Companies has reported 90% engagement among members of its workplace pension, which was launched in October 2018.
The organisation’s new group pension, provided by Hargreaves Lansdown, was launched in response to the need for staff to take a more active approach to planning for retirement. The new pension scheme also provides Starr Companies with the ability to create tailored communications campaigns, such as messaging about contributions around the time of scheduled pay reviews.
Pot Size
The way in which providers communicate with consumers depends to a large extent on the services being provided and the relevance that has to consumers’ lives.
This is as true with pension pots as it is for other services. A consumer is much more likely to find an £80,000 pot of relevance than they are an £800 one. Many DC pots are currently small, but the nature of automatic enrolment means that more and more consumers will have pots with larger amounts of money in them. Differentiating communication by how much money someone has saved is a logical addition to the engagement journey.
A study by Optimisa Research for the ABI in 2017 found that a personalised message about the potential gain from a modest increase in contributions resonated strongly with all audiences - for example, “Increasing your contribution by 1% of your salary in each of the next five years will add at least £32,000 to your pension in 20 years.”
Equivalent worth
One device which has been shown anecdotally to be effective in comparing the amount of long-term savings a consumer has to other large financial outlays they have made. This allows providers to put the steady growth of savings in an easily visualisable way. This has reportedly been effective in Australia. Consumers could be notified when their pot is:
- More valuable than their car
- More valuable than the average house in their area
- More valuable than their annual salary
These sorts of comparisons need to be placed in context, however, as they could lead to consumers falsely believing they have saved enough.
Compare to peers
Another way in which pot size could be used to better engage consumers is by comparing them to their peers. Having an understanding of the level of pension savings that their peers have can place in context what actions need to be taken. This approach could be based on age, income or even profession. Example messages could include:
“People have on average saved XX by the time they are 35, how close are you to the average?”
“Most people in your company take advantage of matching contributions, why don’t you?”
Consumer research has frequently shown that one of the reasons consumers fail to engage with their pension is because they do not see it as their own and do not see it as an asset. The size of the pot can change this and illustrate the value that it represents.