Pensions – should we really be that bothered?

With each New Year, and this year especially with the GDPR imminent, schemes will be looking to refresh their member data, make required changes and send out new communications where necessary.

While scheme trustees, administrators, sponsors (the list goes on) need access to certain information to inform their own records and decisions for the year ahead, how much do the members really need to know?

In a recent presentation at a pensions conference, a room full of trustees were bluntly told to “leave millennials and adults alone”.

With this, the speaker suggested that certain groups of people do not need to know the ins and outs of their pension, as long as they are saving. She noted that as most millennials are now part of the auto-enrolment generation, they are likely to have a lack of interest in understanding any more than how much they are contributing into their pensions and how much they have altogether. This, she explained, is enough.

Adding to this, the speaker also stated that older adults, too, need to be left alone. This may be due to other preoccupations such as starting new businesses, paying off their mortgages or being settled in a DB pension that will already guarantee a comfortable income for life.

Although I’m not in total agreement that millennials, like myself, and the generations above them should be completely kept out of the loop when it comes to our savings for retirement, I do accept that the industry may be setting itself a greater challenge than is necessary.

What I mean by this is the notion, which I believe is shared by many immersed in the pensions sector, that schemes are overcrowding their members with large volumes of unnecessary information. Initiatives like the pension passport and more prominently, the upcoming pensions dashboard project confirm this issue and highlights that members do not require masses of detailed information about their pensions and prefer condensed, concise summaries.

It is from platforms like these that members, who need or want to know more about their pensions, are likely to seek more advice or guidance.

A trial conducted by the behavioural insights team for Pension Wise with LV= last year found that pension passport users are 10 times more likely to use Pension Wise when making retirement decisions. It was noted that the use of simpler, clearer communications with documents such as the Pension Passport, will enable savers to make better pensions decisions. It is also hoped that the the dashboard will also lead to a greater uptake of advice.

It seems to me, therefore, that the key to engagement is simplicity. By streamlining information members are less likely to suffer from ‘finance fatigue’, whereby they are too overwhelmed by the information that they presented with that they don’t pay any attention to it at all.

Like a good journalist looks to create headlines that spark interest but do not divulge the entire story, pension schemes should look to entice the interest of members, through streamlined but clear communications and then increased engagement is likely to follow. Spark members’ interest, don’t drown them in the dense depths of pensions!

So, while I agree with the importance of engaging with members and providing appropriate education, maybe think twice when going to send your members a ‘2018 pensions update’. Does it say too much? Is it really necessary?

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