With the number of defined benefit plans in decline, pension provision through defined contribution arrangements is very much the norm. But engagement from employees is needed if this form of saving is to produce a satisfactory outcome for both employees and employers.
When defined benefit pensions were standard, engagement was not so critical. Effective communication was about informing and, perhaps, encouraging appreciation of the value of the benefit.
So, employees were generally the passive recipients of facts about their scheme.
Now, employees are faced with choices and decisions that are essential to reaching a successful outcome. This year’s new pension freedoms introduce a new layer of choice and pose questions that employees are ill-equipped to answer such as:
- How do they plan to spend their money in retirement?
- How long will they live?
As we know, there is considerable evidence that choice, in itself, is not always a good thing.
Get these decisions wrong and there will be a workforce that simply can’t afford to retire and has to continue working well into old age. This could pose a significant business risk in terms of productivity, performance management and profitability. And with an ageing workforce, young talent will have nowhere to go.
So how do we engage people with what many see as the complicated, difficult and quite frankly dull subject of pensions? Here are six tips to bear in mind…
1. To engage you have to be engaging
Ask anyone what they find engaging in another person and they’re likely to say something along the lines of humour, intelligence, enthusiasm and empathy. How well does your pension communication score against these criteria?
When Capital One needed individual consent forms to be signed following a change to their pension investments, they produced an animated rap video on the subject. As well as generating noise and laughter, 99.5% of pension plan members filled out the form.
2. What we feel is as important as what we think
To engage people you need to make emotional connections with the lives they lead. In the past, communication has focused too much on the features of a pension – how it works, the importance of contributions, investment strategy, etc – and not enough on the relevance of the subject to real life. It should be less about the attributes of the pension plan and more about what the plan can do for someone.
In his book “Incognito: The Secret Lives of the Brain” David Eagleman shows how you can do a maths problem without consulting your internal state, but to order a dessert off a menu or prioritise what you feel like doing next you need to engage a different, emotional element of your brain.
It’s these emotional networks that are required to rank your possible next actions in the world.
So, to engage, we need to make the link between pensions and things that are important to people in their lives.
Using real people as case studies can help to do this. In studies employees have shown they trust “people like me” – so showing what peers do and how they benefit will be powerful.
3. Focus on outcomes not on inputs
The pensions industry has spent the last 25 years trying to educate people so that they “get” pensions and it hasn’t worked. Why? Because it’s focused on inputs (contributions and investments) rather than outputs (a target income in retirement)
Members want help:
- Establishing a target income in retirement (“what do I need?”)
- Knowing where they are against that target
- And what to do about it if it looks like they might miss it.
This requires an “outcome” focussed approach to our communication.
Does what you provide help employees answer these three questions?
4. Use your brand
A brand is more than just a set of corporate identity guidelines. A brand can determine levels of trust and confidence in the messages you send – all of which are critical in achieving engagement.
5. Remember, one size doesn’t fit all
Face-to-face communication is the most effective communication channel but it’s expensive, time-consuming and often impractical.
So other media are often required. Different media have different strengths and weaknesses; and the audience have different preferences in how they want to access and process information.
Mixed media campaigns are generally more successful in achieving their objectives.
Think about how you should segment your audience; consider:
- Attitudes and behaviours
6. Strategy should be simple
An engagement strategy should be simple and should be capable of being written down on a single sheet of A4.
The things that make a difference to a communication programme are:
“Ideas” will develop a common theme, metaphor or proposition that links the messages members receive. It will provide the big concept that will hook people in and get them interested. To be useful and lasting, it’s got to make employees:
- pay attention
- understand and remember it
- agree/believe it
- be able to act on it.
Our “words” are equally important – along with the tone of voice used. Typically this should be conversational, written in plain English with a touch of panache and style to it.
But we know that words alone are not the most effective way of communicating. Research suggests that over 80% of human learning occurs visually and we know that visual elements also affect us emotionally. Images should have meaning and not just be part of a “design style”.
Above all, we should remember that we don’t want employees to feel like they’re sitting a GCSE in pensions. The key is to address the reality of people’s lives rather than the technicalities of pensions.