A change in language can have a dramatic effect on people's attitudes towards pension savings, with three phrases in particular proving to be effective.
A survey conducted by Invesco in partnership with Nest found a mere two in 10 (20 per cent) 35-54-year-olds were engaging with their pensions properly and felt they were on track with their retirement savings.
A bigger share of the 1,800 pension savers polled April and May this year, 35 per cent, said they did not know what steps they could take to better prepare for retirement, and one in five (20 per cent) said they did not know how to find out how much money was in their pension pots.
And although 38 per cent were aware of online retirement planning calculators or resources, just 5 per cent had spoken to a free government pensions advice service or financial adviser.
The provider said the problem was many people felt overwhelmed and lacked confidence when it came to pensions but simple alterations to the way providers engage with people could make all the difference.
Jo Phillips, director of research and innovation at Nest Insight, said: “People in their late 30s, 40s and early 50s are at a life stage when retirement is perhaps starting to come into focus.
"Yet, despite the efforts by pension providers to deliver messages and tools designed to encourage retirement planning, many people in this age group are not engaging with their pension savings.
“Through this research, we’ve explored whether alternative choices of language and message framing might help motivate people to take the first steps towards being in control of their retirement income, and make existing tools and support more effective.
"Overwhelmingly, we found that communications that meet people where they are, with empathy and reassurance, and make retirement planning feel manageable, can give them the boost they need to engage for the first time.”
The three phrases that can encourage people to take steps towards managing their pensions were:
- You’re already on your way to having a retirement income;
- Start from today and plan forwards;
- There are steps you can take.
When asked before and after reading these messages, participants' likelihood to use online tools such as retirement calculators rose from 29 per cent to 51 percent, and those who said they were likely to set a retirement income or pension savings goal rose from 23 per cent to 40 per cent.
The proportion of respondents who said they were likely to check the balance of their pension pots rose from 52 per cent before they read the three statements to 69 per cent after, and those saying they were likely to increase their pension contributions rose from 16 per cent to 39 per cent.
Stephen Messenger, head of UK strategic institutions at Invesco, said it was widely recognised that effective communication was one of the largest barriers defined contribution practitioners face in engaging with their members.