The topic of member engagement came up again and again at the recent DC Roundtable event I attended with industry professionals Chris Roberts from Dalriada, Ben Roe from Aon, Matthew Swynnerton from DLA, and Donna Walsh from Standard Life.
There was consensus that members aren’t as engaged as they should be with their pensions and that we, as an industry, need to find solutions that drum up engagement rather than rely on members to take the lead.
We know from our own New Choices, Big Decisions research that 3 quarters of people aren’t doing any retirement planning, and when they do make decisions, they draw down too quickly, with little thought of the consequences.
Engagement usually comes just before, or at the point of retirement for a lot of members, leaving them little or no time to affect their pension in a positive way. We need members to engage with their pension at all points in their life, not just before they’re due to take their savings.
The ultimate moment of truth for most of our members is when somebody in their family dies, not when they retire. Having some extra cash at such a time could be essential to help fund funeral costs and support close family needs. We should consider changing some of the focus of the engagement narrative with members to immediate issues such as this. Encouraging people to nominate a beneficiary right from the get-go for the benefit of their loved ones can ensure that their money ends up in the right hands at the right time.
Recent events have sadly meant our death claims team have dealt with lots of deaths lately. Sadly, where we have no nomination, it can sometimes mean delays as we establish who to pay the pension savings too. Having a nomination form helps guide us through the decision complexities. If we connect with people’s lives today, and they give us a nomination by signing up to the website, we can get money to the right people when they need it.
‘It’s my money’
Signing up online and filling out a beneficiary form are the starting points of saying, ‘I’m saving up and it’s my money.’ Hopefully, once this connection is made, it will drive further engagement and members will view their pension savings as more than just a benefit that can be accessed in the distant future.
Pension education was mentioned as a solution to drive engagement, and it does have its place. But we’re never going to be a nation of financial planners, and I’m not sure we’ll ever get to the point where we educate everybody, but maybe we’re approaching this the wrong way. By simplifying our products and removing excessive jargon in our communications, we can make pensions less complex and more understandable to the majority of members, so they can make better decisions as a result. This is something we, as providers, should take the lead on. Rather than asking members to make their own decisions or seek independent advice, we need to build products that aren’t too complicated and provide straightforward communication in plain English.
The up-coming changes to benefit statements and the possibility of ‘statement seasons’ should help in this regard. Anything that brings about the stripping of long, complex jargon that constitutes statements and turns them into shorter, more succinct ones will be a vast improvement.
Another area where we’re looking to build member engagement is responsible investing. Everyone at the roundtable event viewed ESG-led investments as a major positive and feedback from surveys conducted across the industry provides clear evidence that members feel strongly about this topic.
At The People’s Pension, we’ve recently removed a quarter of a billion pounds’ worth of funds from companies based upon the nature of their business activities. Exclusions typically involve controversial weapons, addictive substances, gambling, and activities damaging to the environment, with tilts away from carbon intensive activities or companies with significant carbon reserves.
What we need to do next is get better at communicating what we’re doing and explaining how it benefits the environment, wider society, and the decisions of large companies so that members actually feel it. We’re not quite there yet. It’s going to take time, but that’s the target we need to reach.
It was great to be involved in this roundtable event, and it was very positive to see consensus on many of the issues affecting the industry. A lot of hard work is already being done, and we’re making positive changes in responsible investing, education, and simplification. If we can communicate this work and get members to focus on the benefits of their pensions today, earlier engagement should follow.
For more from the DC Roundtable please click this link to The Pension Age article.
This article was written when we were B&CE, before we changed our name to People’s Partnership in November 2022.