FTAdviser contacted Ros Altmann to ask would the government consider acting on an adviser’s suggestion for a mass media campaign designed to prompt people to be more proactive about their pensions by highlighting the woe that could befall them if they fail to set cash aside for their retirement.
She said: “Obviously the government is fully aware that levels of contributions are not sufficient but it is also very important to help people get used to the idea of pensions savings before we get them to increase their contributions, otherwise the danger is they will drop out.
“It is about the timing of any contribution increases. Pension providers also need to engage customers with pensions and explain how much or how little contributions are needed.
“Pension contributions should go up but forcing people to do so could also undermine contributions.”
In October Baroness Altmann admitted current auto-enrolment rates are “inadequate” and would have to be increased in the future.
Jeremy Edwards, associate partner and IFA at Martin-Redman Partners, suggested the mass media campaign could be the answer to people’s inertia over their pensions.
He said a massive change between people being proactive and passive was needed to avoid disappointment over pension returns.
Mr Edwards said: “The government is notoriously bad at this. It needs to be the mass media.
“It is getting it into people’s consciousness.
“Before, people could be passive because they didn’t have to do anything. They were on a final salary scheme and someone else did the work. But now with 7 per cent returns, unless you take an active interest, that is less than two-thirds of your target income.”
He said it was pressure groups and campaigns around wearing seat belts that led to a series of advertisements which, while expensive, worked.
In the case of pensions, he said, Workie, the government’s latest television advertising campaign to promote automatic enrolment that features a multi-coloured creature, had triggered no changes in saving behaviour.
The government’s Workie campaign is targeted at the 1.8m small business owners who will be required by law to auto-enrol their employees into a pension scheme over the next few years.
Steven Cameron, regulatory strategy director at Aegon, said: “Shock tactics can be effective but when it comes to pensions I don’t think we should start by scaring people.
“Just 8 per cent of the population are on track for retirement and if we’re going to turn this around we need to empower people to act rather than frighten them.
“Pension providers need to keep communications simple and offer digital tools that encourage people to take action.
“One of the messages we hear from focus groups is that they think everyone is in the same boat when it comes to their pension.
“Rather than shocking them, a better approach is to show where people of a similar age and earnings are with their savings, and encourage them to outsave their peers.”