With auto-enrolment now complete across workplaces and as minimum contributions begin to rise, thoughts of those in the industry are turning to how to boost engagement among first time pension savers. This is particularly true of the millennial generation, as for many of them, auto-enrolment is the first introduction they’ve had to the world of long term saving.
Understanding and engagement with pensions in this group is currently low: according to a recent YouGov poll, around a third of millennials have admitted they simply don’t know much about pensions.
But with minimum contributions rising, the industry is recognising the need to find ways to engage with millennials to prevent them from opting out. We speak to four experts about what the industry can be doing to successfully convey the value of pension saving to millennials.
Keep communications relevant – and digital
Graham Peacock, Managing Director of Salvus Master Trust, believes the communications process could be significantly overhauled.
For him, a small core of millennials are “unengageables” – and no amount of engagement programmes is going to change that. They are simply too far away, both in terms of age and mindset, from retirement for the industry to reach them.
For this group, Peacock thinks the most effective approach is to keep communications relevant and to the point. “It means rethinking the communications we’re used to sending out to customers,” he says. “We need to be disciplined about having everything visible and easy to digest on statements. But we need to think more about the format in which we send them.”
“Paper based systems are simply not going to cut it with this age group: we need to target them where their eyeballs already are,” he continues. And for many in this group, that means optimising communications for smart phones, ensuring that millennials can view their pension funds online. “We need to become much more digital as an industry if we’re going to remain relevant,” he says.
Hannah Gilbert, author of the recent ShareAction report Pensions for the next Generation: Communicating what matters agrees that more could be done from a digital perspective.
“Pension providers could invest in digital tools, including apps, to achieve greater engagement and two-way communication with their members,” she says. “Pensions information could be more available and shareable via social media, allowing people to seek information from colleagues and friends, and to respond to social norms they perceive as relevant to them. Successful apps such as Instagram and Snapchat work through sharing of images. People’s pensions are invested in the real world and there could be associated, shareable imagery for many of these investments.”
Communicate the benefits of responsible investing
Despite most auto-enrolment providers being committed to responsible investment, they are not doing enough to communicate this – or its benefits – to its members, according to Gilbert.
“Responsible investment is a prudent approach to long-term investment and risk management that should apply to pension scheme default funds, whether or not pension savers, or their sponsoring employers, ask for it,” she says. “From ShareAction’s work, we know that while almost all of the UK’s major automatic enrolment pension providers are committed to responsible investment in some form, there is a communications gap further upstream.”
She believes this presents the industry with an opportunity to engage with its members. “One significant step forward would be if pension providers sought out what savers are interested in, for example through surveys or roadshows,” she suggests. “Imagine a survey of members in 2018 asks them which of four values they are most interested in and a member picks one on gender equality. In 2019, when the pension provider sends information to that member, it could be framed through the lens of ‘you said you cared about gender equality: here’s what we’ve been doing recently as an investor to promote gender diversity on boards and through company operations and supply chains’.”
Put customer experience at the heart of product design
Oliver Mitchell is founder of Moneycado, a savings account for travel. According to him, while approaches to reaching millennials may differ, the basis of engagement remains the same. He believes that comes from having a well designed, customer centric product.
“Millennials need to grasp the significance of pensions to their long-term life planning,” he says. “This is not a matter of education, it is primarily product design. If pension products were as intuitive to use as consumer technology apps like social media ones are and as everyday banking apps like Starling and Monzo are becoming, then engagement will follow.”
…Think beyond the conventional
Rebecca O’Connor runs the award-winning Good with Money blog. She believes the traditional pension product could be improved.
“Products that are available digitally, offer slick, human user experience, are attractively designed and bring some kind of benefit now as well as conferring benefits in the future would do better with the millennial audience,’” she says. “Millennials have grown up with loyalty points, rewards, speedy, convenient service – and they do everything on their phones.
“If a pension could be created that offered real-time benefits, like Starbucks coffees or weekly cinema tickets, the more someone saved for their retirement, that would be a winner for millennials.”
Mitchell thinks the perfect long term savings product might not yet exist. “An alternative I’d like to see, but as yet have not, is a long-term savings product which accounts for more varied life stages,” he says. “The linear three stage life of education, 40 year career followed by retirement is increasingly being broken up by periods of career transition, further training or entrepreneurialism. Each of these different stages and the transitions in between have different cash flow requirements, and so products which help people maintain a consistent standard of living while living a more varied life path are very interesting. But the mechanics of this, whether they be credit or savings based and their means of delivery, are all yet to be explored.”
Can the pensions industry learn anything from other industries? O’Connor believes a more relaxed, fun approach could pay off for pension providers.
“Loosen up a bit, have some fun with what a pension is, what it does, its potential power to change the world and the sense of excitement people get when they invest and have a personal stake in the wider world,” she says.