AN HOLISTIC APPROACH
The pension industry not only needs to improve its communications strategy to encourage members to save more but also to help manage the conflict created by the combination of auto-enrolment and the introduction of freedom and choice.
Ravi-Burslem says: “For decades the system has worked as a paternalistic system where scheme members were not required to make any choices apart from what annuity to buy.”
The introduction of freedom and choice means auto-enrolled members still participate passively during their working lives but now that changes when they reach the age of 55.
Ravi-Burslem adds: “Suddenly the control shifts and the onus for the decision making is on the member without having prepared them for a potential cliff edge.”
To ensure members will be equipped to make the right decision once they reach 55 requires a holistic approach to a communications strategy. Ravi-Burslem says: “The strategy has to be part of a 20-year journey.”
Master trusts and schemes need to think about how to engage with a group of younger DC savers who come into the pension system for the first time without disturbing the benefits of the inertia.
Ravi-Burslem says: “At the start of the journey, messages need to focus on encouraging them to keep saving.” As they grow older, the messaging needs to shift to getting them to think about adequacy and what lifestyle they want in retirement. As they approach retirement, the emphasis switches to the fundamental choices they will face. This requires a sophisticated strategy. “There needs to be the right messages delivered at the right time using the right channels in a very targeted and segmented way,” Ravi-Burslem says.
The pensions industry can learn from industries which have a history of successful communications. “Whether you are communicating about pensions or chocolate, the principals remain the same,” Ravi-Burslem says.
The scheme or master trust needs to understand their members’ motivation, the barriers to engagement, which channels should be used and which messages will trigger action. Ravi-Burslem says: “Above all communications need to be relevant.”
That means designing communications from the perspective of the members rather than the product provider. “That means focusing on benefits that are understandable and relatable to the target audience,” Ravi-Burslem says.
Trevor Rutter, senior communications consultant at Like Minds, agrees. “Rather than focusing on percentages, tax relief and investment strategy, communications need to explain what it means to a member.”
The industry needs to take a page out of the advertising industry’s playbook and understand that a sale is not made by explaining the technical details but by arousing an emotional response.
Rutter says: “Advertisers understand that you don’t sell a car by explaining how the combustion engine works but by emphasising the freedom it will give you.”
The equivalent emotional trigger for a pension should be explaining to people why it is important and how it has the capacity to change a member’s life. “Rather than a dry and dusty product, schemes need to show how it can positively impact their life,” Rutter says.
PUTTING IT TO THE TEST
There is no way to make communications relevant without understanding the audience. And that can only be achieved by testing. “A focus group is needed to determine how a message would be perceived by the target audience,” Ravi-Burslem says.
This can ensure the message the scheme wants to convey is the one received by the membership. Webb says: “If you really want to ensure your scheme member is receiving the right message, you need to test it.”
And that means testing everything in that communication – including its design, the images used and the exact wording of the copy. Ravi-Burslem says: “This is the only way to ensure that communications are eliciting the right rather than the wrong emotional response.”
All of the elements of a communications strategy should be thought of as a potential problem. Ravi-Burslem says: “It might well be the case that communication might elicit a reaction that those who signed off on the wording never considered.”
A communications strategy will make people take action if it manages to inspire and motivate and that can only be achieved by understanding what pushes the right emotional buttons. “The pensions industry will have no choice but to move in this direction as technology is rapidly changing the way people engage,” Ravi-Burslem says.
But there may be a split between the quality of the communications available between large and small schemes. Gosling says: “These types of sophisticated strategies will become more widespread in large, more paternalistic schemes and master trusts; smaller schemes will struggle to find the resources.”
