11th November 2021
Earlier this week we hosted a webinar on how to use digital to engage workplace pension members to help them achieve a lifetime of financial well-being.
We were joined by four expert panellists – Carol Young, Director of Reward and Employment at NatWest Group, Trustee of two pension schemes with almost 400,000 members, and Director of the Pensions and Lifetime Savings Association.
Alongside her was Anne Fairweather – Head of Government Affairs and Public Policy at Hargreaves Lansdown, which runs a workplace pension scheme with around 400 employers.
Also on the panel, with 25+ years’ experience in the workplace pension industry, was Jamie Fiveash, the CEO of Smart Pension. So too was Roger Higgins, Head of Technology for the BT Pension Scheme.
Collectively, we discussed why there’s a pension savings shortfall, the role of government in encouraging investment, and the impact the pensions dashboard will have on the industry. Plus, we talked about the role of digital and how it can be used to improve member engagement.
Here’s 10 lessons we learnt….
1. When it comes to getting people to save more into their pension, engagement can be a double-edged sword.
The biggest challenge for both pension providers and employers is that when members engage and see a saving gap they often feel overwhelmed and bury their head in the sand.
Coupled with the cost of living, members who don’t have the funds to invest end up saying, “we'll get to that later”.
In fact, for Carol Young from NatWest Group, engagement isn’t a cost-plus exercise.
“As a rule of thumb, every time we engage with our DC members on whether they're saving enough, about a third reduce what they save, rather than save more,” she said.
2. Digital tools should be easy and simple to use.
After rolling out a new digital solution for its 200,000 members, Roger Higgins from BT Pension Scheme said members wanted their new portal to be simple, easy to use and to be able to access information at their fingertips.
“Members don’t want to wait for complicated information to come in the post. They want it digitally. Or if not, they want to speak to someone who knows what they're talking about,” said Roger.
Smart Pension CEO, Jamie Fiveash reiterated this point. From his experience he says digital has an important part to play in getting the right information to the right people at the right time, but you have to “make the admin easy and the process enjoyable”.
3. Digital engagement should be part of an omnichannel strategy.
Whether you’re introducing chatbots, portals or apps, there should be other channels such as telephone, video, webinars and brochures too.
“Digital is brilliant. It's fast. And particularly the non-retired like to log in and get information they need. Many like instant engagement such as chatbots. However, other people want to talk to us. It’s about letting people choose the right way of getting in touch, that fits with their timings,” said Roger.
4. It is possible to change member engagement and behaviour by following a tried and tested framework.
You can change member behaviour by following the M.A.P framework, says Jamie, which is currently being used to great effect at Smart Pension.
M - Get them motivated. Smart Pension does this by introducing smart rewards and retail incentive programmes.
A – Assess their ability. Make it as easy as possible for people to log on, says Jamie.
“If it’s difficult, they’ll just give up. We're constantly looking at how we can improve that experience. If you don't make it easy for people, they just won't engage,” he says.
P – Introduce prompts. It’s all about prompting people at the right time. Nudging people at key life stages.
5. Timings of communications is critical – use digital to reach members in “moments that matter”.
It was agreed that people don’t need to engage with their pension that regularly. But there does need to be space for check-ins every year, says Anne Fairweather.
“It’s about making sure people have got a steady flow of information. What we're looking at is a long series of nudges rather than a quick big bang,” she said.
Carol agrees; at Natwest and RBS they roll out a series of nudges to their members. For example, they have a “save more tomorrow” scheme where they automatically increase people's savings when they get a pay rise.
Plus, they aim to reach people at key “moments that matter” - graduates and apprentices, new starters, and those going through life events such as marriage, divorce, maternity, and bereavement.
6. Employers, trustees and providers collectively play a key role in encouraging engagement.
Engagement is at its highest when the employer, the provider and the trustee all work together following a coordinated plan, says Carol. You then need feedback loops for the members so that you can see what's working and finesse the provision from there.
However, of that group, employers are particularly influential as they are seen as a trusted pair of hands.
“When we talk, speaking as a responsible employer, members believe that we have their best interests at heart,” says Carol.
7. Data and metrics are important tools to see how members are engaging and what digital journeys are working.
It’s important to collect metrics to understand levels of engagement which is how Hargreaves Lansdown use their data.
“With our workplace scheme we look at things like – whether people have downloaded the app. Have they nominated people who would receive the funds in the event if they died before withdrawing?” said Anne Fairweather.
Data is also useful for building “continuous feedback loops”, says Roger. He says they continually monitor members’ feedback to understand where they’re get stuck on a journey. They then make a change “very, very quickly to improve it for the next person”.
Jamie agrees about using data to learn. He said: “It’s important to learn where people are getting stuck on the journey. We’re constantly reacting to the data points. That needs to happen all the time.”
8. Government legislation needs to change so advice can be tailored and personalised to the individual.
The government needs to create the correct framework to regulate enhanced guidance to enable providers to use and share data more effectively in a way that’s safe.
Currently, it’s very hard for employers and providers to give tailored, personalised information to members. If rules around data use changed, companies will be able to personalise information to the individual.
“If a member received an email saying, ‘We know you're at this life stage, and these different things are happening to you. We can also see you've got this much money invested in your pension. Have you thought about X, Y, and Z?’ I think that's when you’ll start to see a potential shift in engagement,” said Anne.
9. The pension product may need to change to increase engagement with younger generation.
Jamie suggested a couple of ways of changing the pension product to engage with the younger generation. For example, using it as a vehicle to help people get their first property. Or the widely discussed “pot follows member” idea.
“This doesn't mean that employers shouldn’t select a very good default and have that responsibility there. But if we really want engagement, we've got enable individuals to take their pot with them. We've got to start a culture of individual ownership,” said Jamie.
However, Carol disagreed with this concept. As a large employer, who's making a significant investment into workplace pensions beyond the normal minimum, she says this approach poses a risk for the employer.
“We're already at the point where there are lower levels of saving, the idea that our employer pension contributions might be constantly changed for houses or side cars, is not a valuable thing from an employer's point of view. So, I think that's a challenge,” she said.
10. The pensions dashboard is a digital game changer, but there’s a debate about how it will be used for good.
Phase one of the pensions dashboard will enable people to see their pensions in one place. However, it was agreed that in itself is not enough. The important issue is how people are going to use that information.
Jamie suggested that the dashboard has the opportunity to become an online marketplace. Or at the very least be used as a springboard for making pensions much more digital than they currently are.
However, both Roger and Carol were less enthusiastic about this outcome.
“I’m worried about how DBs are going to fit into the dashboard. The last thing we want to do is push a transfer to the dashboard, and someone says, ‘Oh, look, I've got £300,000 with BT I'll go and access that now’. I think my trustees will probably say you're not having any information, if that's what you're going to show,” said Roger.
Carol shared his caution. Although she said the dashboard will provide opportunities for innovation and potentially drive better communications, it could also encourage riskier behaviour.
“One of the risks is that people will be seduced by slick marketing campaigns, that place a higher value than would be in their best interest, encouraging them to have all their pensions in one place. The danger is they won’t think about some of the consequences of that - particularly around cost and governance,” said Carol.
To hear more of this discussion watch our webinar on demand here and find out how digital can play a pivotal role in encouraging member engagement in workplace pensions.