For those that don't know, this week is Pension Awareness Week. But, while we are all working hard to improve engagement among members, what are the key metrics of success? Here are seven measures to consider…
Pensions Awareness Week is a campaign to raise awareness of retirement planning across the country. It's organised by Pension Geeks and Scottish Widows, and supported by the financial services industry, businesses, employers and the Department for Work and Pensions. The campaign culminates in Pension Awareness Day on Saturday.
As part of the campaign, the Pension Awareness Campaign bus is currently touring six major UK cities - giving people access to free help and information from a team of on-board pension experts.
But, while the industry is working hard to improve the level of pension knowledge and engagement among scheme members, what are the key metrics of success?
Hargreaves Lansdown has developed seven measures which it uses to assess engagement among workplace pension members. These metrics are as follows:
- Contributions: are members electing to pay more than the minimum level set by their employer?
- Investment choice: do members change where their pension is invested?
- Pension transfer in: does a member choose to transfer old pension schemes into their workplace plan?
- Additional account: do members opt to save and invest alongside their pension, often for goals that are closer than finishing work?
- Online access: have members registered to view their pension online?
- Log-in: have members logged into their online account to view their pension in the last year?
- Death benefit - has the member nominated who they'd like to receive their pension pot if they die?
Hargreaves Lansdown says it deems members to be engaging with their workplace pension if they have satisfied at least one of these criteria.
The pension boredom threshold
The financial service firm also identified a ‘pension boredom threshold' - the size of pension pot above which members become increasingly engaged.
It said half of its workplace pension members with less than £5,000 saved are engaging with their plan - but notes that this leaps to over three-quarters of those with £5,000 to £10,000 saved. As such it has identified £5,000 as the pension boredom threshold for its savers.
Hargreaves Lansdown senior analyst Nathan Long: "We know relying on auto-enrolment (AE) alone, with contributions of 8%, is not enough; the question is what can be done about it? The review of AE came and went without pushing contributions higher. Expecting any change on this in the short term looks hopeless given the Brexit backdrop and the sensitivities the current government might have to increasing employers' costs.
"Bridging the shortfall instead relies on people being nudged, cajoled and enticed into taking a greater interest in their own retirement planning. This doesn't mean everyone needs a PhD in pensions, they just need to start off small by registering to view their account online and checking how much they are paying in. Boosting engagement requires regular, targeted communications across digital, post and face to face, meaning it's not easy but can be done."
