The Department for Work and Pensions (DWP) has suggested that a structured plan to assign priorities may be needed to develop engagement with private pensions.

It conducted research to explore consumer engagement with private pensions in the UK and assess ways this engagement can be increased.

The review identified a range of possible engagement points that the DWP could develop further, noting that the lessons that can be learned were “highly varied”, ranging from specific actions around language to fundamental challenges, such as encouraging easier comparability between products.

Therefore, it argued this implied that a structured plan for developing engagement was needed to assign priority over the many possible actions.

Furthermore, the DWP found that actions to develop a greater sense of pension engagement and improve members’ financial literacy may be required.

It acknowledged that research had already been conducted to assess different member segments, and said that an understanding, or consolidated standard model, of member segments would be “very powerful”.

This potential model would allow the government and providers to better develop products and communication, according to the DWP, which may be especially important for segments featuring more disadvantaged members who may not attract high levels of commercial attention from providers.

“Member engagement with seldom heard audiences could be supported by developing a network of community and partner agencies,” the DWP added.

“These organisations could support conversations and share information with these groups.”

The report also identified communication effectiveness, information provision, and using technology as factors that could increase member engagement with pensions.

Communication effectiveness included making information more visible, understandable and relevant to members, as well as taking a more ‘consumer centric’ approach to pension communications.

Meanwhile, information provision included actively sending information to people about pensions, while using technology referred to digital tools, such as dashboards, interactive tools on apps, and generally improved online access to pensions information.

“This needs to be caveated with the understanding that the effectiveness of technological tools depends on the level of members’ digital literacy,” the DWP noted.

Its report also suggested ways to increase pension engagement, such as creating awareness through different communication channels, focusing on the information “that members want”, and building trust in pensions and financial providers.

Finally, the DWP discussed the roles and responsibilities of different stakeholders, including members, employers, community groups and associated agencies, pension providers, and the government, in supporting and fostering member engagement with pensions.

Commenting on the report, Broadstone Personal Financial Planning senior manager, Rob Hillock, said: “We welcome the DWP’s commitment to addressing persistent challenges around pension engagement and it’s encouraging to see the new Pensions Minister focusing on this critical issue.

“However, as always, actions will speak louder than words. The collaborative approach outlined in the report must now translate into real, tangible steps that improve engagement among pension savers and lay out a clear role for employers in supporting this agenda.

“With the Chancellor focused on ‘productive finance’, ensuring that individuals not only trust the pensions industry to support them along their saving journey but also remain actively engaged is essential to delivering better outcomes for savers."

---