Key points
- Employees are still confused about pensions, the new freedoms and how they apply to them
- Organisations that strive to be an employer of choice need to go beyond merely complying with the new changes and use strategic communications to educate their workforces
- Pensions should be positioned as part of lifestyle choices, not seen merely as a product
- Communications should demonstrate the value and benefits on a personal level
Two months after the “biggest changes to pensions in 100 years”, fundamentally, what has changed? Much is beginning to change on the provider front, with many readying new products that enable consumers to take advantage of the new freedoms.
Employers, on the other hand, have been panicking at the impact these changes could have on their workforce and how this shift in responsibility should be dealt with. So where does that leave their employees? Well, for the most part, they still feel the same as they did about pensions before 6 April 2015: uninterested and confused.
It is unfortunate that pensions have been sold as mere products for years. New features might sound great now, but how many will still be relevant in 40 years’ time? How many other things do you buy now and tuck away for that long? Worse still, the buyer is rarely the end user (the employee) as the decision about which product to use is often made by the employer. For a generation that expects choice, why should anyone be excited about something they have not picked for themselves?
For more than 10 years I have been telling anyone that will listen that pensions are not about products or policies, rules or regulations; they are about people. They are part of a lifestyle choice that requires employees to engage in the concept from an early age. With that in mind, it is time to rebrand pensions.
The new face of retirement
Today’s benefits programmes require employees to make complex buying decisions through their employers. This creates a unique set of support needs. Employers do not need to change too much to comply with the new laws but, as an employer of choice, they will recognise that the modern workforce expects their employer to do more than simply meet their financial needs; they want them to support their lifestyle decisions and help fulfil their personal aspirations in many other respects.
Successful businesses offer products or services that are clear, defined and focused on the value they offer. Employers should seek to communicate their benefit programmes in the same manner so employees can make the decision(s) that are right for them. So how should this work for pensions? There are four simple things that any employer could do:
Firstly, make saving into a pension compelling. Although experience tells us that this is a challenge, it can be achieved. Employers that are seeing the most success in engaging their workforce are using communication strategies based around providing clear, personalised, timely and action-focused messages that appeal to an employee’s lifestyle aspirations, whatever they may be.
Make sure the value of membership and the choices available are obvious. At a time when most savers are netting 0.1% on their savings, how appealing might ‘free money’ through tax relief and employer contributions sound to those seeking the biggest bang for their buck on their money? With the new freedoms, how they then spend their pot is entirely their decision – great.
Make it easy to understand. Despite tax and legislation complexities, the basic premise and advantages of pensions are far simpler than ever before. On top of that, the means through which employers can deliver these messages and basic education are richer and more diverse. From creative animations, social channels and one-to-one financial advice, never has there been so much opportunity to communicate in the way people want to receive information.
Finally, given the employer-employee bond of trust, it is important to show employees that a pension is a safe place for their money. This is best achieved through a governance programme that involves employees and communicates key messages back to all members in an inclusive and transparent way.
This issue of ‘buying’ something that will not be used for 40 years will not go away; but, thankfully, we live in an age where freedom, choice and effective communication allows people to buy benefits, not products, and this is finally putting employees in the driving seat.
Let the rebrand begin.
Neil Strong is director of consulting at Shilling, an Arthur J Gallagher Company
