Michael Kind looks at how to get millennial savers talking about their pension and move them to action.
Complex, remote, and irrelevant - this is a millennial's perception of their pension.
This apathy is what auto-enrolment is premised on, but there are so many reasons for savers to get in the know, not least of which is undersaving.
So how do pension providers help their younger members do this? Over the past six months ShareAction has been running a project looking at how to hook millennial savers into a conversation about their pension and move them to action. Whether raising contributions, learning the basics or switching to an ethical fund, unhelpful perceptions need to be dispelled. Here's what we learned.
1. As a first step, tell a different story about what a pension is and does
Why should savers pay attention to an email of their annual member statement or a statement of investment principles when their pension feels irrelevant? None of us are as rational as we'd like to think. It's only when a pension assumes relevance that savers start listening. Prioritise storytelling and education to begin with.
2. Make pensions tangible
Talk about pensions in terms of the world they build around us right now, rather than solely in retirement terms. Whether it's the train station you commute into or the tea you have when you get into work, there are numerous points in your day-to-day life where your pension has had an impact - and can be made to feel real. Change our understanding of pensions from the distant to the immediate, and build connection by doing so.
3. Emphasise the huge impact of our savings
Twin tangibility with impact. Talk about how much of the world around us our pensions help to build. Nearly half of all assets under management in the UK is pension money, and the total value of UK pension assets is 120% of GDP. Let's not forget - our pensions' impact on the actual world beyond accumulation is pretty cool.
4. Talk to millennials in a language they can understand
Don't steam in with a load of jargon - that's a sure-fire way to lose interest. Remember, we're starting from a place of complexity. Perhaps talk about building a portfolio like you would a pizza, as Zuper do. This doesn't mean you skip on the legal stuff. This simplified member statement by Quietroom is a great example.
5. Centre responsible investment in your comms
Start with a conversation about values and bring pensions in through this lens. For millennials, this may be about the environment, human rights, or health. Talk to them about climate change and then tell them how their pension can play a part in solving it.
When you piece this all together, it becomes easier to relate to your pension and to understand its potential. We found that millennials suddenly sat up and paid attention. This was especially the case for women, traditionally under-represented and at greater risk of lower pension wealth.
Once hooked into a conversation, you can start to get millennials to do things. What we're certain of is that a perception change approach in these terms is far more engaging than that which the bulk of savers currently receive.
6. Embrace technology
Don't use the same channels to talk about pensions in a refreshed way. Millennials want easy, user-friendly products and information - not what the average pension portal or annual statement currently looks like. Use videos, apps and integration with other technologies (see Smart Pension's link up with Alexa) to make user experience smoother.
The world is changing fast, and climate change will threaten a lot of that progress. The pensions industry needs to get on board and take its members with it. By following these steps, we can create a nation of savers who are as financially switched on as they are passionate about the world they live in and will retire into.
Michael Kind is campaign manager at ShareAction
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