While this was a welcome move, it also presented a host of new, complex financial issues for savers, such as accumulation/decumulation; pension contribution rates; and the dispersion of pension pots across multiple employers.
Combine these with the remoteness of retirement, and pension planning rapidly goes to the back of anyone’s mind as a distant matter to be addressed in the future.
Then, it would already be difficult for savers to have any chance to improve their outcomes.
An apathetic approach to this life milestone has, in fact, tsunami-like features: it starts out as a small blip very far away, but it grows in destructive strength as it progresses towards us. – when you see it, it is already too late.
The Department for Work & Pensions (DWP) is rightly concerned and is working on several solutions in tandem to help remedy savers’ lack of engagement with their pension, such as shorter paper statements and a “pension statement season”, whereby savers receive their individual statements around the same time. Yet this doesn’t seem to be the radical solution that will tear down the wall of saver apathy – rather it’s just a perpetuation of an ineffective communication tool.
Pension statements have already failed to trigger any meaningful action, so it is difficult to see how delivering more of the same, at the same time, would help in solving the issue. If one statement elicits a bland response from recipients, more statements together will likely just increase the garbage fodder.
Previous initiatives with the same noble aim, such as Pensions Awareness Day, also failed in cutting through the noise. If the DWP wants to increase engagement, it should leverage those very platforms where engagement is already happening, that is social media.
Nowadays, Britons are more likely to check what is in their DMs than in their mailboxes. According to Statista, at the beginning of 2021 there were 53 million active social media users in the UK, equal to 77.9 percent of the entire population.
Facebook had the lion’s share: it is the most popular social network across all age groups with over 50 million users, with the highest use among those aged 45 and above who should already be seriously thinking about their pensions. Instagram is the second most popular with 30 million users, while Twitter ranked third with over 24 million and TikTok is expected to surpass 11 million soon.
The proliferation and news coverage of retail investing platforms, online communities, and financial memes have increased social media users’ curiosity for personal financial management – so there is clearly interest here, it simply hasn’t been utilised effectively yet for pensions
Like in “The Big Short” movie, these online communities have adapted technical jargon and concepts, once exclusively confined to Wall Street’s trading rooms, to more approachable formats for Main Street, thus earning significant engaged followings.
Pension institutions must therefore realise that there are different languages and channels for formal and informal communications. As B2B2C businesses, they can’t expect the same level of understanding from sponsors (B2B) and end-members (B2C) alike, as the former have a far more intimate knowledge of the subject than the latter.
“Insanity is doing the same thing over and over again, but expecting different results” goes a known adage misattributed to Albert Einstein.
No one is really expecting to receive another lecture from Margot Robbie in a bathtub as per The Big Short, but pension providers cannot keep fighting a perennial industry issue with the same inadequate methods. If the industry is serious about breaking through to savers, it needs to communicate with them using a new set of tools.