We need to talk about pensions
Written by Ijeoma Ndukwe
A stronger focus in pension communications has led to a new approach. Ijeoma Ndukwe explores the latest tools used to engage members of pension schemes
When confronted with the choice of a holiday, a new car or an increase to your pension contribution it’s not difficult to see why the last option is often sidelined for the more glamorous alternatives. When you factor in the current economic climate, the idea of reducing your current income to save for what seems to be in the distant future is completely unappealing. With the growth of a currently immature defined contributions pensions world, the race is on to develop methods of effectively speaking to a disengaged audience.
According to investment marketing intelligence firm Spence Johnson, research shows DC schemes are not currently communicating successfully. Apparently the take-up rate in many schemes is “distressingly low”, often lying below the 50 per cent mark despite significant employer incentives. However, in recent years experts have begun to look at new ways to engage with pension fund members. In a fast-paced world where the word ‘pension’ evokes the idea of something complex and time-consuming, communications teams have come to realise that the message and delivery must reflect the culture of their audience.
Competition has driven some of the most innovative changes within pension scheme communications according to experts. The industry realises that they are competing for the attention of consumers and likewise their cash, similar to other consumer-led products. Ferrier Pearce senior pensions communications consultant Hannah Clarke says the days of the top-down approach, which assumed people would read things because it was in their interest, are gone.
Pensions are now operating in a faster, more demanding world where their audience expects information to be delivered in the manner to which they’ve grown accustomed. Capita Hartshead head of marketing and communications Louise Harris says there is a need to mirror the consumer industry. “You want things instantly and you want things to be easy to digest. That’s your expectation.” She goes on to explain that this consumer influenced approach has to follow through even in the language, design and tone irrespective of whether it’s a booklet or online. She cites the pensions communications for their retail client Marks and Spencer, describing how they look like lifestyle or fashion publications.
Harris describes mobile phone communications as playing a major strategic role given peoples’ increased interest in managing their finances online. For example, members can receive a text message each month when a payment is made to their account, prompting them to check their online balance, thus staying engaged.
Market research firm Nielson estimates that 38 per cent of the UK population owns a smartphone. Therefore the integration of QR codes into communications, which allows anyone with a smartphone to scan a barcode and go straight to online content, is another way to provide instant access to information and can prompt immediate action. Pensions administration firm RPMI says this technology has become common in the UK, but is far more widespread in Italy for example where adoption of new technology is said to be faster.
Digital communication allows a more targeted approach, according to Harris, as it allows experts to use information that is relevant to a consumer. This can be attributed in part to changes in UK pensions regulation. Harris describes how one can now log into a secure environment to see what their pension is worth as well as play with different scenarios such as, ‘what if I save more or retire early?’. According to pensions communications firm AHC, limitations exist depending on the European country; for example, in the Netherlands a cover letter accompanying all benefits statements is prescribed in law. Despite this the challenge of providing effective communications within the barriers of legislation exists in all markets and understanding the consumer is critical.
Social media is cited as a valuable tool that can be used to learn more about consumers’ needs. When a client approached AHC to assist in communicating specific changes in their pensions, chief business development officer Karen Partridge oversaw a project where she engaged employees in a focus group and then successfully continued the discussion on an internal social media site.
However some experts are cautious about social media. DCisions business development director Nigel Aston is unsure about its effectiveness: “The problem is people don’t go to Facebook to find out about pensions. They go to chat to their friends. They go to LinkedIn [and Twitter] for certain things. If you impose a certain message on Facebook it can jar.”
Experts agree that the focus should be on the message rather than the channel. Technology can simply be a way of empowering an individual according to RPMI’s head of communications Jonathan Clark. “We’re finding that not one particular age group accesses a certain channel. It’s about offering choice about how people access their pension schemes; be it print, online, or mobile.” Clark explains: “Mobile internet via smartphones, tablets and apps – these technologies are allowing you to close the gap between the decision you make and actually doing it. Often we lose momentum. If we make a decision we like to act upon it there and then and that’s what smartphones allow.” He adds: “[But] empowerment won’t make a difference unless you’ve engaged someone.”
A ‘back to basics’ approach is dominating communications and Clark, like many other experts, speaks of personalisation and the need to steer away from a blanket approach. “It’s now a question of not being the same for everyone. Most employers will have four generations of employees around them.”
Simple language and short clear messages are part of this new streamlined approach. Also feeding them information gradually at different stages rather than bombarding them with details. Aston explains: “[In the past] we were trying to teach them about equities and bonds and they don’t need to know the minutiae.” Now it’s considered important to develop ways to give members the option of finding out more should they choose to, according to Shilling communication consultant Samantha Waterhouse.
These sentiments are reflected in a paper by Spence Johnson, which looked at the most effective DC pensions communications from around the world. Their research involved analysing campaigns which offered evidence that they worked and the paper highlights their findings. One of the themes identified was the effectiveness of a call to action which makes a specific effort to generate action from the member. Many pension communicators talk about the importance of spotting and seizing key moments such as reaching a certain age and a promotion when people are prone to making decisions about their pensions. Standard Life head of corporate marketing Ann Flynn also talks about helping members through that journey. She believes communicating through the workplace at the start of the journey is important, yet she emphasises the need to adopt a multi-channel approach.
A valuable element of the internet, according to one specialist, is that it allows one to measure the effectiveness of certain online developments to drive engagement and interactivity. Also, significant technological innovations, such as developments within mobile technology have made communications easier, faster and more instant. Despite this the focus is on the message and conveying that message in a palatable and engaging way, which is at the heart of communications across all industries.
Harris explains how 20 years ago communications were led by technical requirements and scheme booklets contained the rules. ”Communications is now a strategic function of business and the shift has been to improve the written style so people understand the content.”
Written by Ijeoma Ndukwe, a freelance journalist