Strategy & Operations » DC pensions: how engaged are your members?

Pensions are becoming increasingly aligned with the finance function as employers consider how to best ensure pension schemes add value to an organisation. As a result, finance directors must assess a company’s pension offering in terms of getting value from pension expenditure, improving business results through reduced turnover and productivity, and ensuring financial wellness for colleagues.

One critical element to pension scheme success is member engagement, yet knowing what message to communicate to members and how to communicate that message can raise challenges for many organisations in the UK. In a recent Financial Director survey held in partnership with NEST, 51.6% of finance directors said that they had not implemented a member communication strategy, and nearly a third (29.4%) of those who had said that they thought it could be improve with better communication.

So how should organisations adopt a member engagement strategy and what does good engagement look like? These were just two of the issues discussed in a recent Financial Director webinar, in which our panellists reviewed how companies should approach the engagement dilemma, examining best practices, strategy and how to overcome engagement challenges.

Approach to member engagement

An engaged workforce has numerous benefits for an organisation, and the company pension scheme can play an important part in driving this engagement, including a strengthened employer/employee relationship, improved employee retention, and improved financial wellbeing of staff, leading to rising productivity.

Mark Rowlands, director of customer engagement at NEST, explained that the approach to engagement has evolved over recent years. Five years ago, pension engagement aimed to encourage individuals to take fund investment decisions, whereas now most of those decisions can be automated. Engagement in 2018 is about understanding the value of what the employer is providing to the employee.

But according to Rowlands, the first question that organisations must ask before embarking on a new engagement initiative is, what behavioural change are you trying to drive? An organisation’s desired outcomes will inform other engagement decisions, such as selected messaging, channels and measurement of engagement.

Jeremy May, UK head of pensions at PwC, added that when approaching member engagement, organisations shouldn’t think about pensions in isolation, but rather consider them in the context of financial wellness. As financial stress can significantly contribute to turnover of staff, companies should review other means of financial support for employees – for instance education and debt support to help those facing high rents or student loans – as well as continuing pension discussions.

Member communication strategy – best practices

What message should be communicated?

Messaging will vary depending on the organisation and the desired communication outcomes, but member research from NEST on what individuals need from their pension has found that individuals ultimately want to know that they are on track to live comfortably in retirement, with the key questions being: are they saving enough? If the answer is no, organisations need to inform individuals of that fact.

Organisations should also be aware of member segmentation – tailoring the message to suit a particular demographic. Yet, while segmentation can be a useful tool, it often doesn’t address the fact that two people with similar profiles on paper might actually be very different in reality and therefore require separate communication. The solution is personalisation – better results will be achieved if the message, timing and action required are personalised to the individual.

How should the message be communicated?

Employers should leverage a multitude of touchpoints to convey the message to individuals. However, the channels through which they communicate need not be brand new or innovative. Both Rowlands and May agreed that organisations should start with channels that are already in place, utilising communication formats and language that a company already knows work for its employees.

Delivering communication little and often is crucial to the success of a member engagement strategy, said May. According to Rowlands, employers could follow a “nudge” style process by which communication is delivered around certain milestones in an individual’s life, such as a birthday. These key moments are when individuals could be more likely to engage with pension information.

How can employers measure good engagement?

Measuring whether the communication strategy has been successful links back to an organisation’s original objectives and the behavioural change it is trying to influence.

Engagement could be measured through member surveys to gauge an individual’s thoughts on the pension and benefits offered, increased traffic to a pension portal, or deeper awareness about the pension opportunities available. Identifying success all depends on whether members are responding positively to the action promoted in the messaging communicated by the employer.

Who should take responsibility?

Both Rowlands and May agreed that responsibility for pension engagement should be shared between government, employers and individuals. Government has a responsibility to set the right regulatory and tax environment; employers have the role of pension provider, taking the lead on producing pension materials or pension programme; and individuals also have responsibility to take the right steps to save for retirement, supported and guided by government and employers.

Challenges

Possibly the biggest challenge that employers face when engaging with members in the digital age is cutting through the white noise, as individuals are continually bombarded with information. Leveraging technology to develop messaging personalised to members will help to overcome this challenge, although this initiative is not yet widespread across the pension industry.

Organisations must also be persistent, often having to deliver the same message on numerous occasions and in bitesize chunks to drive the action required. Pensions are not necessarily seen as the most engaging topic in the first place, so employers have to ensure that messaging and timing are frequent and relevant to incite a response from members.

Final thoughts

For employers considering implementing or improving a pension engagement strategy, Rowlands recommended addressing the following five key points before embarking on a new strategy:

  • Be clear on the objectives
  • Be clear on the business benefits of improved engagement
  • Be clear on the scope
  • Understand what you currently do for engagement
  • Be clear on your measurements so that you know what has been successful and what hasn’t

To find out more, listen to the full Financial Director webinar on pension engagement, or find out how NEST can help employers to engage members with their pension schemes.