The pensions industry needs to make a change and start communicating better if we want to get people saving for retirement, argues Sara Benwell
The pensions industry has a communication problem. Between incomprehensible jargon, long letters and a preachy tone, it’s not hard to see why people are out of love with pensions.
But with the new pension freedoms dominating headlines and swathes of people being auto-enrolled in workplace schemes, we finally have a chance to rehabilitate the industry’s reputation.
The folk over at Pension Geeks would certainly agree. This year they transformed the second Pensions Awareness Day into a week-long, 500-mile bus tour to try and engage people.
However, if we want to get people on board with retirement saving, we’ll have to deal with the naysayers first.
So how can the industry turn over a new leaf?
Acknowledge the sins of the past
The first thing the sector needs to do is recognise its past problems, says Nick Throp co-founder and director of communications specialist Like Minds, and a former advertising executive. “Pensions is a damaged brand so you need to go back to basics.”
We’ve been doing that for ages and it hasn’t worked”
He continues: “The first thing is to acknowledge that fact, and not just keep on saying ‘you know what, pensions are terribly good for you, it’s very important you do something about it’ and lecturing people, because we’ve been doing that for ages and it hasn’t worked.”
Making a change
It’s not enough to just own past behaviours. The next step is to change them.
Matthew Blakstad, head of member proposition at government-backed umbrella pension scheme Nest, explains: “This is a long game and we’ve a role to play to build trust in the people who are saving with us and to demonstrate that as a trust-based scheme we look after their interests and we can be a good, trustworthy custodian of their savings. But that will take time.”
People don’t want to be educated, they’re busy”
Throp believes the key is to stop telling people what to do: “Acknowledge the things that the pensions industry hasn’t done well. It focused on trying to educate people. And people don’t want to be educated, they’re busy, they have other things in their lives.”
Savings not pensions
Part of the problem is that many people do not see the value of pensions. So simply repeating ad nauseum that they need to get one doesn’t do much in the way of changing minds.
One of the brains behind Pensions Awareness Day, Jonathan Bland, explains: “We’ve done a lot of research and also just having been outside the pensions industry most people don’t even have a clue about what a pension is and don’t think about saving in the here and now for the future.”
A pension is another way of thinking about how you might save for some of those things”
The solution, argues Throp, is to communicate about pensions in the context of saving. He explains: “You move away from saying: ‘Here’s a pension, this is what it does and how it works and you need to understand all the complexities of investment strategies and effective contribution rates to get something out of this.’
“You say instead: ‘Everyone’s got important things that they need money for and that’s what saving is all about and a pension is another way of thinking about how you might save for some of those things’.”
We also need to couch that communication in ‘real person’ language, rather than sounding like aliens from Planet Finance.
Before Nest began enrolling people, the scheme carried out research to explore exactly what the communications issues were. It found that one of the big problems was the language used.
It can make people quite angry”
Blakstad argues that the industry needs to be very careful about using phrases like ‘trivial commutation’. He explains: “You think you are teaching people. But what we found is that it had quite a strong emotional effect on people, they feel very excluded, they feel blinded with science.
“And it can make people quite angry, or more likely, it just puts the shutters down straight away.”
Let me entertain you
It’s not enough to just be non-technical, argues Hannah Lewis, director of communications firm Behave London. The industry also needs to learn to be entertaining.
As an industry, finance is terrified of using humour, of taking a light touch”
She says: “In essence, pensions need to be less boring. How? By making the messages easier for the consumer to understand. That means simple, jargon-free, and explained in terms they can grasp firmly. Get rid of statistics and replace them with infographics, which paint a picture.”
“Advertising, as the legendary advertising guru Dave Trott would say, has one purpose, and that is to work. Its secondary purpose is to be liked. If you apply that to pensions then yes, we will sometimes be pointing out uncomfortable truths.
“Most importantly though, we fail to entertain the customer. Think about how much advertising is funny or raises a smile. As an industry, finance is terrified of using humour, of taking a light touch.”
Monkey see, monkey do
Psychology has a role, says Lewis: “As a species, we are designed to pay attention to what’s immediately in front of us, and the further into the future that stretches, the more we struggle. There are ways to do this, and behavioural science can help.”
Nest’s Blakstad agrees that ignoring behavioural psychology is a problem endemic to the industry. The example he gives will be familiar. It’s the classic pensions marketing literature illustrated by an elderly couple walking a spaniel along the beach.
’Let’s speak to the things that people value today’ is one of the most important lessons we’ve learnt”
“That flies in the face of all the evidence both from consumer marketing and also the behavioural evidence around how people struggle to make connections with their future selves,” he explains. This is actually a distancing message rather than one that brought people closer to the notion of pensions.
“What we’ve done in our communications is to try and focus on the passions, interests, hobbies and pastimes that people have today.
“The one basic question that we’re trying to ask of people when we communicate with them is: ‘Do you want to carry on enjoying the things that you enjoy today when you’re in your retirement?’ Funnily enough, people say: ‘Well sure, I’ll still be a football fan, I’ll still love my shoes,’ or whatever it might be. That sense of saying: ‘Let’s speak to the things that people value today’ is one of the most important lessons we’ve learnt.”
Drowning in red tape
With the best will in the world, the pensions industry still faces one major obstacle when it comes to communicating with consumers – compliance.
Compliance is the enemy of clarity in communications”
“Compliance is the enemy of clarity in communications,” explains Throp.“It also tends to make people much more risk averse around the way in which they communicate. Now I completely understand the need to be legal, decent, honest and truthful in your communication but we have driven a compliance culture in the industry.”
He also believes that many industry players use compliance as an excuse not to make a change. “I think to some extent that has led to a compliance-vested interest. So the industry has not done things and they use compliance as an excuse, but reality they just don’t want to do it and I don’t think that’s right.”