Andy Farmer
Consultancy Partner

The annual industry-backed Pensions Awareness Week took a virtual route this September. Its aim? To get people talking about pensions, in an upbeat way and maybe plan better for their retirement. 


The media greeted the campaign with the usual range of industry sourced statistics telling us about the nation’s grim retirement outlook. The added ingredient this year was Covid. 


L&G estimated that pay cuts, furlough and lay-offs resulted in £5.3billion less in pension savings among the over 50s.


Abrdn chipped in with figures suggesting that two out of five people fear they won’t have enough money to last through their retirement, while adding to the gloom was Fidelity saying that 29% more workers are delaying their retirement because of savings shortfalls.


All too easily, pension awareness can turn into pension anxiety. This is especially the case with workers enrolled into employee schemes who feel remote and disconnected from their pensions. 



Growing engagement in DIY investment tech

But this doom and gloom is at odds with the wider investment landscape, where there is a growing appetite for DIY investing and newer vehicles like ETFs and ESG, exacerbated by the pandemic. 


In 2020, there were 4.6 billion downloads of finance apps worldwide, outperforming the next best category by a factor of 2, and in January 2021 alone roughly 6 million Americans downloaded a trading app


In the retail arena new Fintech providers and media publishing sites are showing impressive engagement levels. For example, 20 million people now use the crowdsourced investing community site Seeking Alpha every month


There is now widespread evidence that digitally-engaged younger adults are more ready and willing to dabble in investing (and in the US, Robinhood enjoys mass market appeal, for good or ill)



Members are time poor and overwhelmed with educational information

So when it comes to their company pension schemes, why does the disconnect with employees remain so wide? 


The trite answer is that employees don’t have the digital tools and facilities to access their pensions. The reality is most do, but they don’t always make the process easy and approachable. 


The boss of one of the biggest employee schemes in the UK says we can hardly blame the workers; “People with children have about 17 minutes to themselves every day.” 


Pensions will hardly be at the top of their to-do list, especially when it can take longer than that to register or find a password and log in. 


Once inside, members using workplace pension portals often encounter Q&As that are well-meaning but text heavy and presented in an uninviting way. Members are being made to work too hard to engage, rather than being inspired. 


What’s needed is some radical re-thinking about how to properly engage and build trust among younger and middle-aged workers, rather than waiting until they are well into their 50s and waking up to some grim home truths. 


The good news is that auto-enrolment has successfully laid the groundwork, dramatically increasing participation numbers. Nearly 90% of eligible private sector workers are now members of workplace pension schemes.


The problem is how little is going into many of those pension pots. The current minimum total contribution rate is 8% of earnings, when contributions of double that figure are needed if most workers are going to reach their retirement goals. 


How to solve the pension shortfall? Join our webinar on November 9th to find out.


But as a sneak peek we'll tell you that the solution lies in digital initiatives. We spoke to some of the leading schemes in the UK, including ones that are making a successful transition into digital. 



Digital initiatives are helping to engage members

Engaging members through easily accessible smartphone apps, with regular alerts and nudges is key. 


There are plenty of contact points - from the date an individual joins the scheme, through promotions, pay rises, birthday milestones, to when they may have paid off their student loan or their mortgage. All are prompts to save more. 


One company’s employee app is enjoying 70% engagement with its members using this approach, a remarkably high figure in an industry where engagement levels with employee schemes can be as little as 2%. 


Specific things make the difference - such as simple one-step and/or biometric log-ins. And regularly reminding workers how cheap extra contributions can be, once tax relief is taken into account.



Gamification and personalisation techniques encourage positive behaviours

Of course, that doesn’t mean it’s easy. As one manager of a large scheme told us, “People are not motivated to engage. Pensions are a really tough sell.” 


To encourage engagement some are turning to “gamification” techniques as a solution, taking inspiration from how Fitbit, Strava and Peleton engage with their users. 


The micro-investing app Acorns uses a combination of personalised rewards, nudges and badges to encourage users into positive behaviours - techniques which have led to a customer base of over 4 million. Others find video summaries are a way to gain traction. 


One large pension provider creates personalised video statements. “Pensions can be quite a dull topic. Personalised video statements make it more relevant and easier for someone to understand. Savers get a one and a half minute video that says: ‘You’ve got two and half thousand pounds, based on that you can retire at xx. Your funds are doing really well. Here’s a graph that shows you that.’ Simplicity is key.”



Lessons from abroad, what’s working

Another approach is Save More Tomorrow schemes, which have taken off in the USA, encouraging employees to allocate a fixed portion of future salary increases into their pension. For example, the worker agrees that 1% of every 3% pay rise goes into their pension. But the adoption of such schemes in the UK remains low. 


In the US, there’s also a growing army of Robo Advisers looking to make inroads into the pension landscape. For example, Marcus by Goldman Sachs offers schemes that enable an employee to register and connect their pension with their bank account in as little as 90 seconds. 


Simple pie charts show users how their money is invested and their total goal for retirement. Blooom, a RoboAdviser which focuses on 401Ks and IRAs also has a service aimed specifically at small and medium sized businesses. 


Meanwhile, Wealthfront has attracted nearly half a million customers since launch in 2018 for its no-cost automated retirement planning software. It opens with the promise that “Investing isn’t easy. We just make it feel that way.” It has been named ‘best robo adviser’ in the US. 


A good UK company pension scheme can learn from all these digital approaches. Done well, a scheme can encourage as much as half of its members to pay in more, according to Hargreaves Lansdown. 


In an era of pension anxiety, these sorts of outcomes should be the goal of every employer and employee. With the much-heralded Pensions Dashboard launching in 2023, it will be the biggest opportunity in a decade for both the industry and employers to digitally engage with savers. 


Find out how to address the pensions shortfall by improving the customer experience in our upcoming webinar on 9th November 2021. You'll be joined by our panel of experts including ORM’s Andy Farmer (Head of Digital Strategy) and guest panellists Jamie Fiveash (CEO, Smart Pension), Nathan Long (Pensions Specialist, Hargreaves Lansdown), Carol Young (Director, Pension & Lifetime Savings Association & NatWest Group) and Roger Higgins (Head of Member Services Technology, BT Pension Scheme).


If you have any questions around pensions or the customer experience as a whole, please get in touch!