Commentators have queried the timing of the pensions awareness season which will take place during a mounting cost of living crisis ravaged by high inflation, surging energy bills and flagging consumer confidence.
The Pension Attention campaign will be a cross-industry effort led by the Association of British Insurers and the Pensions and Lifetime Savings Association with support from the Department for Work and Pensions, and will take place from September to November.
“This campaign isn’t about increasing contributions. It’s about increasing savers’ understanding and awareness, and making them feel good about their pension,” a spokesperson for the Pension Attention campaign stressed.
The Pension Awareness campaign, meanwhile, will run for a week in September and will include a number of free sessions, including explainers on how pensions work, how women can improve their retirement, and how to combine lost pension pots.
Nevertheless, there are concerns over raising awareness about people’s pensions during a period of near-unprecedented strain on personal finances.
“We risk drawing attention to the fact people are forfeiting much-needed income now for a retirement decades away,” personal finance columnist Iona Bain told FTAdviser's sister publication Pensions Expert.
“Households struggling the most may decide that’s a trade-off they’re not willing to make”.
‘Can I pause my pension?’
There is already evidence of workers increasingly electing to opt out of their pensions. Analysis based on pension provider Penfold’s customer base, comprising 5,027 onboarded employees, indicated that opt outs rose by 29 per cent between March and July this year.
Pension Geeks’ Jonathan Bland, one of the organisers of the Pension Awareness campaign, said that it is aiming at educating and engaging savers with their pensions, and is not trying to drive pension contributions up.
“We can’t encourage people to pay into a pension if they can’t afford to run the house, pay bills,” he said.
Conversations between Pension Geeks and workplaces have changed dramatically over the past three to six months. “The most common question we get is, ‘can I pause my pension?’” Bland said. The campaign does not advise savers to do this, but will provide workers with the requisite information, he added.
Contribution levels remain under scrutiny and the government has faced continued calls to implement the recommendations of its 2017 automatic enrolment review, which include increasing overall minimum contributions from 8 per cent to 12 per cent. Pensions minister Guy Opperman has maintained that the review will eventually be carried out.
Bain recognised that while minimum contribution rates may be insufficient, there is a need to acknowledge savers’ financial challenges. She suggested that the lockdown period during the coronavirus pandemic may have been a more suitable time for a campaign, when savings were higher.
The most common question we get is, ‘can I pause my pension?'Jonathan Bland, Pension Geeks“Clearly, the public need to be more educated about pensions if they are to avoid sleepwalking into a disappointing retirement,” she said.
“But it’s going to be exceptionally hard to convince low-income workers to not only maintain but increase pension contributions at a time when they may be cutting back on the basics just to survive.”
AgeWage and Pension PlayPen chair Henry Tapper said that he is “a little disheartened by the received view that people should tighten their belts so they can leave pension savings untouched”.
“This is not a good look. Many people will be comforted by knowing that their pension provider won’t stand in their way if they want money and that they are in control of their pension deduction from payroll,” he said
“Giving people this kind of help is more likely to improve (positive) awareness than simply repeating the mantra ‘save more for longer’.”
Pension Attention campaign is aware of cost of living crisis
Average households could face an annual energy bill in excess of £5,000 next year, according to estimates, while consumer confidence has fallen to a record low.
Independent pensions consultant Darren Philp said: “In a system that is based on harnessing inertia, we need to be really careful to avoid unintended consequences.
“When times are hard people might, quite rightly, make the decision to stop saving to pay the bills.”
It is understood that the Pension Attention campaign will be assessed in the winter with a view to having different messages in future years.
Jenny Holt, managing director for customer savings and investment at Standard Life, noted: “Inflation has been building for many months, and the first engagement season will need to be sensitive to the fact that many people are struggling and long-term savings may not be their immediate priority.
“However, it’s also a real opportunity to get people thinking about their future selves, and to consider the steps they can take today to put themselves in a good position for the future and to recognise the value in what they may have already built up in their pension.”
A spokesperson for the Pension Attention campaign said that it was “acutely aware of the cost of living crisis”.
“We recognise that, for many people, short-term financial needs like heating and food are a far more pressing priority than their pension fund,” they said.
“We want to help people facing difficult financial decisions to make them from a position of knowledge.”
Alex Janiaud is deputy editor at Pensions Expert, FTAdviser's sister publication
