Improved provider engagement is crucial if the industry is to foster the active pension savers required to deliver defined contribution pension pots that deliver an adequate standard of living in retirement, according to Susie Logan, head of business communications at Standard Life.
She told FTAdviser that research has shown many regard just having a pension as enough, but auto-enrolment minimums will not deliver a good standard of living for many.
“DC pensions mean there is a greater need for employees to actively manage their retirement planning – particularly when they have more choice and flexibility with how they take their benefits from April next year.”
Ms Logan stated that since the advent of auto-enrolment, the engagement challenge has changed.
“Previously, the objective of engagement was for people to join the pension. This meant they were making an active decision so more likely to be engaged with investment and contribution decisions in the run up to retirement.
“Post auto-enrolment, people are joining the scheme automatically without having to make decisions. The challenge now is to engage and educate them about their pension – particularly in the run up to retirement.
Looking at examples of where employers have engaged their workforce successfully, she detailed a few core principles they have in common:
• Clear segmentation. The first step is to have quality scheme data and understand the workforce by undertaking a segmentation exercise based on factors such as age, wealth and behaviour.
• Personalised, targeted and relevant communications. Materials aimed at specific needs will drive action and nudging them with information to understand their own needs is vital.
• Drip feeding over a period of time. Building up knowledge over time and in bite-sized chunks is a more effective way to engage employees than bombarding them with information.
• A framework to measure success. By understanding what activity is having an impact and what’s not, it’s easy to see what changes must be made to increase the effectiveness of employee communications.
Ms Logan concluded that there’s a good business case for investing in helping employees to make the right pension decisions – from increased staff retention to talent progression to making sure employees can retire when they want to.
“Auto-enrolment has provided the catalyst to get more people saving, but we are still a long way from employees fully engaging in their pension and being prepared for the long retirement they may have ahead of them,” she added.
peter.walker@ft.com
