Need to know:
- Pensions guidance offers a set of options, while advice is personalised, giving recommendations based on an employee’s circumstances.
- Pensions communications should be easy to understand but also diverse to engage as many employees as possible.
- Targeted support and simplified advice will give employers additional options to help their employees make informed pension decisions.
Promoting the workplace pension scheme can be a major headache, with employee and employer confusion often leading to inertia. Providing a comprehensive communications programme will help employees value the scheme, without landing the organisation in regulatory hot water.
Pensions communications break down into three broad categories according to Philip Brown, head of defined contribution (DC), master trusts and lifetime savings at Pensions UK. “First, there are the statutory member communications, such as joining packs and risk warnings, that must be delivered,” he says. “Next is education and guidance, and finally, advice, which must be provided by a regulated individual.”
Set the boundaries
Understanding the difference between guidance and advice is essential, especially as fears around overstepping the mark puts some employers off doing anything. Jonathan Watts-Lay, founding director at Wealth at Work, has a simple definition. “Guidance is the could dos, perhaps given as a high-level list of options with pros and cons, while advice is the should dos, typically a set of personalised recommendations.”
Advice may be the gold standard but it is not always necessary. Phil Sandford, head of financial education at Standard Life, says: “Only around one in 10 people will need advice. Education and guidance can go a long way in giving employees the confidence to make decisions around their pension.”
Support provision
The pension provider should be the first port of call when putting a communications programme together. As well as taking care of the statutory communications, most can provide support with education and guidance.
For example, Standard Life offers a broad suite of education and engagement materials including presentations, webinars and online information and tools. “Leaning on the pension provider is a must, especially for smaller [organisations]” explains Sandford..”We want to bring pensions to life for employees.”
Some providers can cover off the advice side but it is also common to team up with an advice firm to deliver this more specialist support, typically at a subsidised rate. This has a key benefit, says Watts-Lay. “As the employer’s done the due diligence, it gives employees the confidence they’re dealing with a reputable firm.”
Tried and tested
A further challenge with pensions communications is the breadth of the employee audience. “Everyone’s different,” says Sandford. “[Employers] need to find what’s relevant to them. What does it mean to save into a pension?”
Tailoring materials to different lifestages can help. For example, Wealth at Work might provide an employee in their 20s with the basics, the different funds available, plus the benefits of increasing contributions; while someone in their 40s gets a midlife pension MOT to assess where they are and whether they could save more.
Keeping it simple is key too. Any material must be clear and easy to understand, says Nikolas Nawaaz, head of employee communications at Barnett Waddingham. “It must be engaging and steer clear of any jargon,” he says. “An employer can’t expect someone to read a 28-page brochure: [it] needs to find ways to make it short and simple.”
Interactive tools and calculators are powerful too. These allow personalisation, enabling employees to see the potential consequences of actions such as paying in more or switching funds.
Trusted sources
Employers also need to be mindful of where employees might be getting their information. Large language models (LLMs) are part of many people’s lives, but they will not necessarily deliver top-notch pensions education and advice. “If employees are turning to LLMs, it’s a sign they’re not getting the information they need from their employer,” Nawaaz says. ”It could be a trigger to overhaul the pensions communications or introduce broader education to build financial resilience.”
Part of this could include flagging trusted sources of information to highlight potentially inaccurate advice from LLMs. These could include the employer and the pension provider’s websites but also independent sources such as MoneyHelper and Pension Wise.
More support
More options are coming too as the government seeks to help people make informed financial decisions. Targeted support was introduced in April, allowing firms to make recommendations based on what people in similar circumstances would do.
The Financial Conduct Authority is also running a consultation into simplified advice, which would sit between targeted support and financial advice. “We’re still waiting for the details but these additional types of support are all helpful,” says Sandford. “Anything that gives employees the confidence to make pensions decisions is welcome.”
Having these additional options will improve the support that employees can access but, with pensions often seen as dull and complicated, employers can still make a difference with an engaging and well-rounded pensions education programme.
