People learn from People

Written by Maggie Williams, Editor of Engaged Investor magazine.

Girish Menezes explains that there are better ways to engage with members than through dry product information

How do people prefer to learn about pensions? Based on research that Buck has carried out into members’ engagement with their pensions and workplace savings, it’s in a very different way from the approach the pensions industry currently takes.

We found that many employees’ perception of pensions is that they are ‘smoke and mirrors’ – they don’t know what is going in, or what’s likely to come out. As such, the communications they were receiving about their savings was just not connecting with them.

The research also explored how employees normally learn about pensions and savings and found that that they will go online to money education and comparison websites for expert opinions – as well as referencing consumer reviews of products, similar to those that you might find on Amazon.com. In the same vein, they will explore newspapers and financial consumer magazines, again looking for independent, expert opinion as well as reviews from fellow savers.

However, we found that the most important place that employees go for financial information is to family, friends and work colleagues, especially supervisors. These are people they trust and they feel they will get a completely independent review from them. In contrast, unless they have a very high income, they don’t use independent financial advisers (IFAs), questioning their value and independence.

Taking all of that information into account, you can conclude that people learn from people. They want to talk to peers, friends and family, either in person, or online and they like independent information on websites or in newspapers and periodicals.

If you take those findings and compare them to how we communicate with employees about their pensions, you realise that there is a huge gap. We typically send them a piece of paper – a company document that is not always written in an interesting manner. We don’t provide any statistics around what others are doing; there’s no expert opinion, little face to face communication – very little overlap with how members actually learn.

It’s also worth noting that, given the low opinion many employees have about pensions, perhaps pension communication should not be shown on it own, but integrated as part of a wider benefits package. This could incorporate details on other benefits such as childcare vouchers and healthcare. An employee that doesn’t have a high opinion of pensions is unlikely to open a pensions-specific communication, but will be more interested in their broader benefits package.

While websites are an increasingly popular means of communicating about pensions, it’s not just about the channel, but also about how you communicate. For example, we found out that employees at one of our client companies didn’t trust its HR function, and as such didn’t respond well to communications from it. Employees did, however, trust their supervisors. So we built a pack to help the supervisors create a discussion around why pensions are important. From that, pension take-up went up by 40%. It really showed that creating communication between people is vital.

It doesn’t matter what medium you’re using, but the core idea of discussing options and opinions with others is how people learn, not by reading dry text.

Collective communications - Helping to solve the DC engagement problem

A thought provoking research report from Spence Johnson where they argue that a DC pensions communications campaign that is directed at a target membership audience of less than approximately 50,000 is sub-scale.

You can download it (PDF 3.5mb) from

http://www.spencejohnson.com/resources/BB6+CollectiveComms+100922.pdf