In collaboration with our podcast recorded with Hayley James, PhD researcher at The University of Manchester, we are releasing this guide on how to engage with your pension members.
Let’s start at the beginning: what is money? Money has been understood as an objective tool for buying products and services for millennia. The truth, however, is far from this. The way we use money is socially and culturally embedded. It’s subjective, has a contextual meaning, and is an extension of our values.
That’s important because it will influence the way that your members will connect with their pension and how you will want to communicate with them.
Our article will focus on 5 key points that will help you better engage with your pension members.
1. Understand that your members are individual people
Hayley’s research uncovered four main archetypes amongst the saver base. Listen to the podcast (https://cutt.ly/myxiEBI) to find out more about the four groups: threshold adults, protection savers, sceptical speculators, and market investors.
By understanding that a standardisation of engagement is not going to be effective to a broad range of individuals from different age and demographic backgrounds, your communications can be more targeted to produce better results. This segues into our next point about using life events to engage.
2. Leverage ‘life milestones’
Now that your engagement strategy is split into groupings based on people’s age, demographic, and preferences, you can start to communicate around their life events. In the podcast, Hayley mentions that a large majority of savers did not engage with their pension because they had not yet become established in their present day life.
Therefore, rather than sending ineffective and paternalistic communications about saving more for retirement, look to leverage ‘life milestones’, which serve as triggers for people thinking about the future. For example, if you as the employer know when an employee has a period of maternity or paternity leave, you can structure communications about saving ahead for the future and becoming more financially stable in their older age.
3. The role of technology
It’s fair to say that the pensions industry is behind the rest of the financial industry when it comes to technology. Whilst the mobile & app-based banks have grown exponentially during the last 5 years, the pensions industry has been slower to respond to technological advancements.
Members are still receiving long paper-based statements, which entrenches the view that pensions are dry and boring.
It’s time to shake up the delivery of pensions information and that can start with the annual statement. Whilst members are more savvy and demanding about their money, they still want to view the information in a visual, engaging way. Pension funds must be able to communicate their investment information via mobile technology so people can access on the move.
Let’s simplify the statements and get people more engaged with their money.
4. Impact and ESG
The importance of this area needs to be seriously highlighted. Talking to members on the impact of their money is a very effective way of engaging them. A report by Department for International Development in September 2019 found that the majority of people (52%) say that they would be motivated to save more if they knew their savings and investments made a positive difference in the world. This rises to 60% for those with investable assets over £25,000, and to 67% for millennials.
Additionally, Aon reported in their DC Pension Survey 2020 that during the Defined Contribution Investment Forum in Q4 2018, a survey focused on ESG investments found that Responsible Investing would make 57% of members more engaged with their pensions. Schemes that can share ‘good news’ with their members about how their pension savings are working to make the world a better place, as well being invested to grow, will be able to engender pride and raise engagement with members.
Quite simply, understanding, mapping, and communicating the impact of your fund is imperative to the engagement with your members. The same Department for International Development survey saw that 57% of people say that they are interested in learning about what impact their pension has on the world, and 56% say that they would opt for a fully or partially sustainable pension, if given the choice.
47% of people would want their pension switched if they found out that it was invested in a way that went against their values, rising to 52% for those with assets over £25,000.
The question is: are your pension fund investments are aligned with your organisational values?
The millennial and Gen Z population have an interest in their money like no generation beforehand. Indeed, the report by Department for International Development, showed that 57% of people say that they are interested in learning about what impact their pension has on the world.
In addition to this, campaigns like Make my Money Matter campaign - headed by filmmaker, Richard Curtis - will start a flurry of activity from employees of major corporates enquiring about how and where their money is invested. Charities such as ShareAction are increasingly putting pressure on organisations to engage more clearly with their members on their investment strategies; as well as holding the asset owners and asset managers much more accountable for the environmental and social impact of their funds.
It will be vital for pension schemes to make their members aware of how and where their money is invested. The trust built through transparency will lead to greater engagement.
In conclusion, modern pension fund members are looking for more clarity and transparency on their investments. They want to know the environmental and social impact of their holdings and how they are (or are not) contributing to creating a world in which they’d like to live in when they retire. In a DC scheme, after all, it is their money.
If you’re a pension fund and struggling to piece together how to engage your members, Ethical Compass can help.
Ethical Compass are impact engagement advisers that specialise in working with pension schemes. We connect businesses to the impact of their pension funds through education, mapping, and engagement strategies, to help them align their investments with their member and organisational values.
By working with us, you'll be more aware of your fund’s impact, protecting the brand from reputational risk, and compliant for current and forthcoming regulation and legislation requirements such as TCFD (Task Force on Climate-Related Financial Disclosures) and the DWP regulations on ESG (Government Department of Work & Pensions). You’ll be able to identify climate risks and opportunities within your fund and make clearer decisions around ESG considerations beyond insufficient basic screening.
We then use all of this information to engage with your members, creating emotive stories about the global impact of your fund. Using impact as part of your engagement strategy will help you drive up deposit contributions and reach the younger members of your team, who are notoriously difficult to engage regarding their financial futures. It will help you to recruit the best new staff and to retain the ones you currently have.