A carefully planned communications strategy is required to ensure employees fully understand the implications of auto-enrolment.
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- Creative auto-enrolment communication strategies can educate first-time pension scheme members.
- A good communication strategy will relate to employees’ personal retirement goals.
- Key messages should be presented in a way that helps employees understand the consequences of their actions
Pension scheme communications strategies have traditionally focused on the tax-efficient way in which a workplace pension can help staff save for their retirement, and encouraging employees to opt in. Auto-enrolment turns this on its head, and requires a strategy that highlights the benefits of being in, and staying in, a workplace pension scheme.
Christopher Hopkins, managing director of employee communications consultancy Caburn Hope, says an effective strategy will enable staff to visualise their retirement goals, for example holidays, travel and/or an active social life, and grasp the savings required to achieve these.
“Employers need to be creative and innovative,” he says. “Those that simply communicate the processes of auto-enrolment are missing huge opportunities. A marketing approach will help staff absorb the information and make them think about the benefits of pension savings in a different way.”
A presentation by Emma Douglas, UK leader for Mercer Workplace Savings, at the National Association of Pension Funds’ (NAPF) annual conference last October did just that. Entitled [defined contribution] DC Jet, the presentation used the analogy of an aeroplane journey to represent the journey to retirement. Auto-enrolment was the auto-pilot, tax relief and employer contributions were free fuel, and the nature and location of the eventual landing symbolised the result of investment decisions.
Douglas says: “If it is presented in this way, people can understand the consequences of their actions, and what they can do to achieve the retirement lifestyle they would like.”
One of the biggest challenges for employers is the fact that many of the employees with whom they are communicating have never before contributed to a pension scheme.
Lynn Graves, head of business development, corporate pensions at Scottish Widows, says: “With younger staff especially, it is important to focus on the here and now rather than later in life, and highlight the value of auto-enrolment, employer contributions and tax relief, in terms of actual monthly cash amounts.”
But Vincent Franklin, creative partner at brand language consultancy Quietroom, says employers should instead be encouraging inertia. “You don’t want people to be scared of the changes, so keep the information to a minimum to reduce the risk of them switching off,” he says.
“Then, in a year’s time, when they have got used to giving up 1% of their income, you can show them how their money has grown, with the tax relief and their employer’s contribution, in a way that no other savings account could have done for them.”
Before launching a strategy, employers need to understand their employees’ attitudes towards pensions and savings generally to enable them to design an engaging campaign and assess potential opt-out rates. A staff survey can help employers to do this.
The national employment savings trust (Nest) used the findings of its own survey of 1,800 employees currently not in a qualifying pension scheme to devise a targeted auto-enrolment awareness campaign.
Matthew Blakstad, head of member and market communications at Nest, says: “Knowing they have something put aside and growing, ready for their retirement, would make 78% of them stay opted in, while for 67%, it would be the relief that they could stop worrying they had done nothing to prepare.”
Nest’s national June 2012 campaign, ‘Tomorrow is worth saving for’, used posters and other promotional material encouraging staff to think about the activities they enjoyed now that they would like to do in retirement.
KEY MESSAGES ON AUTO-ENROLMENT
The Department for Work and Pensions (DWP) has undertaken research to identify effective messages about workplace pensions. These messages can be used in any communication channel or product employers choose to pass on information to their workers:
- When employees pay into their pension, their employer and the government will too.
- As employers will automatically enrol eligible workers into a workplace pension, it is a hassle-free way for staff to save.
- Saving into a workplace pension means workers can continue to enjoy the things they like when they retire.
- Staff should not miss out on the money from their employer and the government.
- People could have 20 years of retirement: average life expectancy is increasing.
- The state pension is a foundation for retirement, but people may want more.
- Starting sooner means an employee’s pension will be bigger. The earlier they start, the more time their money has to grow.
- Starting sooner makes saving more manageable. Saving smaller amounts over a longer period has less impact on an employee’s current lifestyle.
- Even if staff are not being automatically enrolled into a workplace pension, they can still ask to join, and might get a contribution from their employer and the government.
CASE STUDY: MERIDIAN BUSINESS SUPPORT
Electronic format makes right connection
A successful communication strategy for the implementation of the Agency Workers Regulations (AWR) in 2011 persuaded recruitment specialist Meridian Business Support to use an electronic format for its auto-enrolment strategy.
Sarah Iglesias, talent operations adviser for Meridian, says: “We learned a lot from AWR, listening to feedback from clients, candidates and employees, and developing a new strategy. For auto-enrolment, we decided on a similar electronic approach, integrated with our current electronic administrative systems.
Legal requirements are often clouded in our sector, with minimum earnings from workers in sporadic or short-term employment difficult to calculate, and requiring an innovative software system to cope with the demands of auto-enrolment.”
Iglesias says she has simplifi ed the key messages of the organisation’s auto-enrolment strategy to make the pension changes easy to understand for its 300 employees.
Meridian incurred significant costs for the initial research and consultation period required for its communications strategy, which launched last July. Iglesias expects costs to exceed £10,000 in the strategy’s first year.
She adds: “We expect people to be curious and want to know more about pensions, so we have planned for a drip campaign, spread over time, allowing staff to become engaged and able toprocess and absorb what is a quite lot of complex information in bite-sized chunks. By our staging date in May 2013, this will be fully understood.”
CASE STUDY: PIMLICO PLUMBERS
Face to face with the full facts
Pimlico Plumbers, London’s largest independent plumbing company, adopted an HR-led, face-to-face strategy to communicate auto-enrolment to its 200 employees.
Dominic Ceraldi, head of HR, says: “The strategy was simple, but thorough and effective. I and the other three members of the HR team met regularly with the company’s pension provider to make sure we were fully aware of the details of the reform and how it will affect the business as well as our employees.
“The HR department has always been the place our employees have come to when dealing with pensions, so I met each member of staff individually to discuss auto-enrolment. I have also arranged for them all to meet our pension and insurance advisers next year to get a clear understanding of the reforms and to highlight the benefits of auto-enrolment.”
Aviva is Pimlico Plumbers’ pensions provider and QBE handles the organisation’s business insurances. As part of the strategy, staff were also asked to complete an anonymous questionnaire seeking their views on the organisation’s pension scheme. Feedback showed about 30% of employees would consider opting out of the scheme come auto-enrolment.
Ceraldi says: “They tended to be the people who are already struggling with the spiralling cost of living and see the reforms as another tax on them. This group of employees will need the most persuading to recognise the long-term benefits of the scheme, and that is something we will factor into our future communications strategy.”
Ceraldi says the costs of developing and implementing a communication strategy have been minimal, and relate to the time spent planning and meeting.
CASE STUDY: ADMIRAL GROUP
Muffins take the biscuit
Admiral Group has used auto-enrolment as a vehicle to promote its existing pension schemes. This has resulted in the number of staff in its stakeholder pension scheme rising from 1,100 to 2,017 within three months of the plan’s launch in 2005.
Benefits administrator Lindsey Christie says: “The strategy was simple. We needed to tailor it to our young workforce, whose average age is well below 30, and we enticed them with a simple presentation that was easy for them to identify with, because pensions can be a complex topic.”
The insurer ran auto-enrolment presentations to encourage staff to think about their current spending habits and savings plans for the future. Free pens, sticky notepads and, most popular of all, free muffins, were given to staff attending a presentation, with the aim of making the event fun. Employees also had the chance to enter a draw to win an iPad 2.
Admiral made the presentations mandatory for employees who had never belonged to a pension scheme and voluntary for those who were already members of the company scheme, provided by Scottish Widows. All staff received a pension pack, including various examples of percentage contributions to help them decide how much they could afford to contribute. Tax and national insurance savings were also factored in.
“Not only did these things appeal to our workforce, but they were also the real key to the effectiveness of the campaign,” says Christie. “We personally didn’t spen anything on the campaign. It was all funded by our pension provider, [which] weighed the cost of the marketing materials against the potential future earnings and agreed to fund it all.”