Introduction
We get it. On the surface, pensions can seem confusing and easier to think about at some other time instead. This often ends up being when it’s almost time to retire!
A recent study* has shown that only 52% of DC members check their pensions once a year and sadly do not know if they are saving enough to retire.
It’s really important to get members on the front foot and planning for their future so they can retire when they want to and have the lifestyle they desire, but how can Trustees encourage members to do this?
1. Embrace technology
Thanks to technological advancements, the world looks very different to 20 or even 10 years ago. These days, you would be hard-pressed to find someone that does not have access to the internet or a smartphone. As things have changed, the days of paper communication are largely a thing of the past – pensions should not be an exception to this! Trustees should recognise this shift and use it to their advantage.
The same survey showed that 80% of members would engage with their pension more if they could access the information digitally. Offering members the ability to view and check their pensions via a website or app would be a good starting point for increasing member engagement. For example, Quantum Advisory designed Benefit Options, which is a secure website that members can access to view information regarding their pension benefits and experience has shown that this enhances member engagement.
We are not suggesting that trustees should start an all-out war for attention against the giants of Instagram, X or Facebook, but recognising that technology is a force for good that can help overcome the initial battle of disengagement is a great starting point.
2. Use ESG/responsible investment as a tool
People love stories. There is science underpinning this, but to summarise; stories elicit trust, compassion and emotion.
Find the story that your members can relate to and which resonates with them and use this as a “hook”– this can be a great tool for engagement. As an example, the focus might be about how a member’s assets are invested responsibly, or how they are personally helping to fight some of the biggest problems that we face today. Making pensions more emotive and something to care about right now will incentivise members to engage more.
3. Provide regular and clear communications
Most members already receive annual updates on the value of their pension and what they could receive in future. Whilst these communications are a legislative requirement, and are useful, they can often be filled with jargon and confusing technical terms, which can be daunting for members.
Providing a personalised, eye-catching newsletter can be a good way to increase engagement. A newsletter can include highlights of all the hard-work that trustees have undertaken over the year, details about the trustees themselves, details about how their assets are invested and much more. The more visually appealing, and simple to understand, the better.
Newsletters are a great way to engage members in a format that goes beyond numbers on a piece of paper, but there are many other ways to do this.
4. Run member surveys
This one is circular. When reviewing a DC investment arrangement, it is considered good practice to run a member survey to gauge member views on the service being provided and the options currently available. However, the response rates are usually quite low.
If trustees implement the first three points properly then it’s a win-win situation. More member engagement, and therefore response rates on member surveys, means that trustees are more informed when making decisions on behalf of members. Trustees can then tailor investment strategies to meet the needs and wants of members, resulting in even more member engagement.
Conclusion
Pensions don’t have to be boring or daunting and it’s important to engage members to ensure they can retire when they want to and have the lifestyle they desire.
Embracing technology, avoiding jargon where possible, telling stories and making members feel empowered and included are just a few ways that trustees can improve member engagement.
If you would like to explore any of the areas discussed in this article please contact Quantum Advisory.
Joe Condy, Investment Consultant
Quantum Advisory
Joe.condy@qallp.co.uk
* Smart Pension: The great pension engagement dilemma. https://view.professionalpensions.com/smart-the-great-pensions-engagement-dilemma/p/1?utm_source=convertr&utm_medium=auto-response-email&utm_campaign=The+great+pension+engagement+dilemma