Most UK workers have become significantly more uncertain about the whole notion of retirement over the past two decades or so. The shift from Defined Benefit to Defined Contribution pension schemes means that they’re now having to contend with uncertainty about how they can best plan for retirement, how their pensions investment funds will perform, and the age at which they can retire.
The result of this uncertainty is lots of anxiety about pensions and retirement. Many people feel helpless and not in control of their own future, and a lack of understanding about the current pension system compounds these negative emotions. People simply don’t have the knowledge and confidence to make informed decisions about their finances, including their pensions.
Encouragingly, our Future Face of Retirement research shows that employers are serious about supporting and empowering their people to approach pensions and retirement planning positively. Many recognise that it’s in nobody’s interests to have large sections of the workforce feeling anxious and out of control about their prospects for later life, and they’re offering workers the information and support they need to feel more in control and aware of their options.
It’s critical that both employers and the pensions industry itself reflect on how they can engage and educate people to help them to enjoy better retirement outcomes. Even now, so much communication around pensions is full of jargon and inaccessible, technical language that turns people off and reinforces their belief that pensions are simply too complex and too boring for them. A lot of people have argued that we need to ‘re-brand’ pensions to overcome this negative belief and it certainly has its merits. Getting people to think about lifetime or long-term savings could be an easier task than trying, yet again, to engage them around pensions.
Whatever label we give it, employers need to take a far more realistic, pragmatic approach to communicating about pensions, recognising that many people find themselves with inadequate savings and little room for manoeuvre.
Communications need to be simplified to give people the information they need in a way that is easy to understand and act on.
Technology has a crucial role to play in driving meaningful engagement and education, and organisations are increasingly embracing innovations in Augmented Reality and Artificial Intelligence to deliver more personalised communications, and to allow members to explore and visualise the impact of the choices they make today on their future.
Communications also need to become more relevant and more timely – we’re seeing far more sophisticated use of nudge communications, encouraging people to consider pensions at significant events such as getting a pay rise or bonus, getting married or having a child.
A more uniform or standardised way of communicating about pensions would also be beneficial – currently, approaches vary hugely between schemes and this increases confusion and complexity for people with multiple pensions. The government’s Pensions Dashboard initiative is to be welcomed and, as an industry, we need to ensure that it meets its objective of providing people with a far clearer view of their overall pension position. Our research shows that there is a real appetite for more peer-to-peer engagement and education, and the pensions industry must start listening to employees and delivering the programmes that they’re demanding.
Business Development Manager – Capita Employee Solutions