Top tips for implementing a pensions education exercise


Need to know:

  • Employers need to set goals and measure outcomes of all financial education exercises.
  • They can segment employees and use all available communication channels.
  • Employers should rely on what resonates with their employees rather simply spend big bucks.

Pensions can be a bit dry and grey and retirement, particularly to the young employee, seems like centuries away so getting financial messaging right and sending it to the appropriate person is crucial. Here are few top tips on implementing successful pensions education exercises.

Goals, goals, goals

Employers firstly need to decide on the goal of the exercise: is it for a special one-off exercise or a regular commitment? How will they measure the success or failure of the initiative?

Employers should look at segmenting a workforce into different audience groups. Jonathan Watts-Lay, director of Wealth at Work, suggests three important groups to target pensions education exercises to: “Early to mid career employees need help to understand the benefits of saving into a workplace pension, including the tax relief they will receive and the contributions they will receive from their employer. Examples that illustrate how these savings can compound over the years can be a powerful way of encouraging employees to maximise contributions early in their career.”

Watts-Lay explains that for employees that are further on in their career, or pre-retirement, financial education will help them understand their current financial position and gain an understanding of the action they need to take to meet their retirement goals. “Making sure pension savings are on track, developing a financial plan for retirement and reviewing investments held in a workplace pension are all critical at this time of life,” he says. “Some employees may also need support around annual allowance and lifetime allowance issues.”

For employees that are a year or two from retirement will need help understanding how they can access their workplace pension, as well as understanding the risks and tax planning required, suggests Watts-Lay: “These employees will also need to consider their workplace pension in the context of all their other retirement savings, including the State Pension, previous workplace pensions and other non-pension savings they may hold such as individual savings accounts (Isas).”

Gareth Tancred, chief executive of the Pensions Management Institute, adds: “It is vital that employees fully understand how to mitigate any risks involved, such as the risk of being scammed, paying more tax in retirement than they need to, or ultimately running out of money in retirement.”

Use multiple communciation methods

Employers can ‘act like an octopus’ to grab employees in their tentacles with a variety of media, apps, intranet, video, text, noticeboards; even notices in the organisation’s toilets can be particularly effective when office or work on site resumes. Alan Morahan, managing director at EB Consulting, points out: “We all have different learning preferences so consider different methods of delivering the message. People certainly seem to value face-to-face if budget allows.”

Kirsty Moffat, head of DCC engagement, at Hymans Robertson, points to the difficulty of engaging with those employees who do not work at a computer and/or don’t have access to a work email. “Focus groups tend to be the best way to engage with these members and seminars/ pensions roadshows but given the recent lockdowns, these have been difficult to organise,” she says.

Remember to Kiss

Keep it simple, stupid, or the Kiss principle, is a useful acronym to keep in mind: employers should avoid jargon at all costs. Morahan says: “Our industry has a habit of shrouding this stuff in words that mean little or nothing to most people. For example, pension consolidation doesn’t mean much to many people, but collecting all pensions in one place does.”

Don’t forget Valentine’s Day

Be opportunistic, suggests Moffat: “One of the most successful campaigns we have seen was linked to Valentine’s Day; in essence the question asked was ‘are you in love?’ and the aim was to get members to complete their expression of wish forms.” Linking pensions with a topic that employees are engaged with, such as climate change, can help to increase engagement with the pension scheme.

Call to action

Have a call to action with a solutions pathway. “If the message is for members to increase contributions, links to where they can do this are useful,” says Moffat. “[Many] pension scheme members have not thought about how much they should be paying into their defined contribution (DC) pension to maintain a reasonable standard of living at retirement.”

One word of warning. Morahan cautions that employers should be very careful not to give the impression that what they are delivering can be perceived as advice, or even guidance. Make it clear that what is being delivered is for educative purposes and sign post where people can go to get more information, guidance or advice.

Don’t just throw money at the problem

Remember big budgets do not equate with success. Money is not enough; it is what resonates with people, not extravagant videos watched by two people. Effective communications need only cost a few pence per person but the impact of inspirational writing can be priceless.