Communication around defined contribution (DC) pension schemes often fails because it is is mis-targeted.
According to research carried out by BlackRock among focus groups of 18-65-year-olds from different socio-economic groups, their basic information needs are not being met. These failing to communicate details about how much employees should be saving, and the provision of easily-understandable pension statements
The findings also show that the level of ignorance about pensions is high among all age groups, with many employees showing no understanding about the basic structure of a pension or the benefits involved.
A common misconception held by employees that it is either too early or too late to start paying into a pension. Saving for retirement comes behind making mortgage repayments, paying off student debt, looking after children and maintaining a reasonable quality of life as a priority. Most employees will only join a pension scheme if it is easy to do so.
However, employees are more likely to respond positively if they are encouraged to save for their retirement rather than invest. As the word invest has negative connotations to do with risk, employers should ensure that pensions, although technically investments, are associated with saving, which is often regarded by staff as a term †that is visible and simple to understand.
Steve Rumbles, managing director and head of UK DC at BlackRock, said: "It's up to the pensions industry and the Government to do all we can to help members understand and engage with their retirement savings. They not only need clear answers, they also need to know the right questions to ask in the first place."