Language is key to improving pensions engagement, according to a DC pension research project Small steps to a better futureby Invesco, Invesco Consulting, Nest Insight and communications specialists maslansky + partners.
Drawing on input from nine industry experts, 1,828 pension savers and 65 Nest members, the research highlighted common barriers to pension engagement for people in their 30s, 40s and early 50s.
Affordability was the main obstacle; half of those surveyed said they were unable to contribute more to their pension at the moment. Also, more than a third (35 per cent) pointed out that they had more pressing financial priorities than their pensions.
Adviser Carl Lamb of Smith & Pinching comments: “People are squeezed by the cost of living going up. For some, the choice is stark − food on the table or pension savings.”
But it is not just about money, says Fiona Tait, technical director at Intelligent Pensions: “Issues such as affordability are certainly real, but they are also sometimes ‘legitimate’ excuses to avoid taking action.”
Covid-19 is also a factor: a third of respondents reported feeling less confident about planning for the future, due to the pandemic. Nearly half (40 per cent) said they felt overwhelmed by the subject of pensions. Only a fifth (20 per cent) said they were on track with their retirement goals.
Lack of knowledge was identified as an issue too. Nearly half (46 per cent) of those surveyed said they do not know how much income their pension will provide on retirement.
Slightly more than a third (38 per cent) were aware of online retirement planning tools, and a tiny percentage (5 per cent) had contacted a free government pensions advice service or a financial adviser.
But people are not happy about this state of affairs. The research reflected on a “sense of defeatism” referred to by more than a third (35 per cent).
Regret was noted too, particularly among the 45-55 age group: “Lots of people are apathetic about pensions till they get to a certain age and then realise that the clock is ticking,” says Lamb.
Overcoming the obstacles
The study tested various words, phrases and communications approaches to identify which were most engaging and persuasive.
It found that three key messages had an impact, including “You’re already on your way to having a retirement income”; “Start from today and plan forwards”; and “There are steps you can take”.
When people were asked before and after reading the messages developed in the research, there was a jump in the proportion of people who said they were likely or very likely to take action in the next six months.
For instance, the proportion of people who were likely or very likely to increase pension contributions went up to 39 per cent from 16 per cent, and in the case of setting a retirement income or pensions-savings goal it rose to 40 per cent from 23 per cent.
Jo Phillips, director of research and innovation at Nest Insight, said: “These results give us reason to believe that these messages can help drive positive change in the number of mid-working-life savers planning and preparing for retirement.”
