Aon Hewitt's Lynda Whitney considers the differing needs of three generational groups
It might be stating the obvious, but every person is different, whether due to age, gender, salary or the way they like to receive information. You need to allow for this variety of expectations and needs. The Aon DC Survey 2016 gives some ideas about how scheme requirements may typically differ depending on the profile of your members.
• Aged broadly 18-34
• May be paying high rent or high house prices and paying student debts, so saving is tough
• Have grown up in a period of vast technological development and depend on their technology
• Feel retirement is a long way off.
The 2016 Aon DC Survey found that millennials have the weakest understanding of pensions out of all the generational groups. They need support to understand the impact that lack of saving now would have in the future.
Members over the age of 55 are half as likely to seek advice as this group - millennials will actively seek out online content. But as retirement seems a long way off, these members are unlikely to want to look ‘under the bonnet' of a pension. They expect you to get the default investment option right for them.
• Aged broadly 35-54
• Are balancing saving for retirement with other costs while also trying to maintain work/life balance
• May have already accumulated some pension savings
• Are likely to be more aware of retirement, but it still seems a long way off.
The Aon DC Survey 2016 found that less than half of people now expect to retire by 65. But given their expected retirement age, are members on track to maintain their standard of living? Have you analysed your scheme membership through a tool like Aon's DC Analytics to see if members are falling short?
At this stage, communication to this group could be on what a member is currently contributing, how that impacts their pension and how they can get back on track.
As this group are a little more engaged in pensions, some members may want to have more control of their investment strategy through access to self-select funds. However, for the majority they still need the default to be right.
• Aged over 55
• Are approaching retirement and are probably at their most engaged with pensions
• Have probably accumulated a variety of assets, want to make them work for them and to understand their options.
The Aon DC Survey 2016 shows that 23% of 55 to 64-year-olds still do not know what they are going to do with their DC funds, which suggests that some of this age group do not understand their options, even at a high level. This group needs communication focused on explaining the decisions that need to be made. The next steps are vital with so many more options now available.
Although some of this group are happy to use technology, the Aon DC Survey 2016 found that unlike the younger millennials, this group was far less happy to go online for information. Paper statements and phone support should still be used with them - alongside online tools - so that members can access information in a way that works for them.
For investment, once the member has decided how they wish to access their benefits, a strategy that targets that outcome while reducing risk can be designed by the scheme.
Men are from Mars…
Women answered ‘don't know' more frequently than men to many of our questions. They appear to be less confident about making pensions savings decisions and they are looking for support both from family and friends and from their employer. They need the ability to access information in a variety of ways so they can share it with someone they trust.
In summary, you need to:
• Be aware of different groups of members within your scheme and their needs;
• Segment your communications to focus on the priorities of different member groups;
• Use a variety of media so that members can access information in a way that works for them; and
• Have an investment strategy that works for each member as they progress through their lifetime.
If you would like a copy of our DC Member Survey or to find out more about how to meet diverse member needs, visit aonhewitt.co.uk/dcpensions, email email@example.com or call us on 0800 279 5588