About halfway through the Q&A session at the launch of Altus’s recent white paper “Shooting for the Moon: A journey towards better retirement outcomes” a member of the audience said something that immediately made me want to go back and change the way we talked about pensions in it.
“You are all looking at this the wrong way, it is not about the pension products people buy, it is about the pension experience that they have throughout their savings and retirement journeys.”
In my head I mentally deleted “pension proposition lifecycle” from our report and replaced it with “pension experience lifecycle” and thought: that sounds about right.
The strength of this argument was not that it contradicted our paper’s core argument: that current regulatory trends can be seen as unified in their ultimate aim of improving consumer outcomes, but rather that it powerfully reinforced our consumer-centric message.
While it was too late for me to do anything about the language in our report, it is definitely not too late for us to start thinking about pensions in this way as an industry.
Over the years I have worked a lot on the pensions journey, especially for DC savers, and have often heard both industry and regulatory voices bemoan the challenge of engaging largely ‘inert’ pension savers, especially in the accumulation phase of the DC savings journey.
My challenge to this has always been: rather than focusing on our need to get savers to engage with the topics we think are important, are we sure we are delivering excellent experiences at those times that these savers try to engage with us on things that are important to them?
Although people’s engagement with the pension system may be infrequent, over the course of a 40-year savings journey to get to retirement there is likely to be a number of occasions where people do attempt to engage with their pensions provider.
For example, when starting a new job, people will be engaged to sign up to that employer’s auto-enrolment pension option, or when they move jobs they may try to take their pensions with them.
As well as job moves, other life events such as a change in work patterns, promotions, changes in marital status, having dependents or buying a house can all act as catalysts for people to interact with their pensions as part of a wider review of their financial circumstances.
Some of these life events will be flagged up in the form of new data available to the scheme – pay rises, updates to an expression of wish form or a change of address – presenting the opportunity to proactively encourage engagement at a time that is relevant to the consumer.
People may also engage for religious or environmental reasons in order to select investment options for their pensions that may more closely match their personal views or values.
At these times what sort of experience do consumers receive? Are their needs met in full and to their satisfaction and are any changes enacted swiftly and with minimal administrative overhead?
In many instances the answer to this question is sadly ‘no’ or at least ‘not quite’. Too often the focus on trying to get people to engage on topics such as contributions or savings rates misses the chances we are afforded to deliver high quality pension experiences in other areas.
This is a huge missed opportunity. Research[1] has shown that 90% of consumers who rate a company’s customer service a “very good” are likely to trust a company to take care of their needs compared to just 16% who give a “very poor” rating.
In pensions, building these levels of trust is vital if we want people to believe that the information we send them is important for them and their financial wellbeing.
So, as we start a new year, instead of continuing to bemoan the challenges of engaging inert savers, let’s celebrate those who do try to engage with their pensions and build them experiences that will lay the foundations of trust from which we, and they, can benefit for years to come.
[1] Qualtrics XM institute, ROI of Customer Experience Insight Report, 2020
