As the government published its report ‘Lessons on pensions engagement’, consultancy Broadstone called for the findings to be “translated into real, tangible steps” that will improve engagement among savers and “lay out a clear role for employers”.
The report, released by the Department for Work and Pensions (DWP), examined people’s engagement with private pensions and what influences this, and outlined ways to improve it.
Lack of trust
It found that there is a lack of trust in the pension system and in the financial institutions that provide them. It called this “a significant barrier to engagement”, and said that a number of groups need to take responsibility to change this.
For example, pension members need to take on board information about their pensions and be invested in planning for their future.
Employers have a valuable role as an “information channel” to provide workplace interventions that engage employees with their pensions, the report said.
‘Consumer-centric approach’
In the workplace, employers can do this by making pension information visible, understandable, and relevant to employees. The report advocated “a consumer-centric approach”, which focuses on what employees care about to boost engagement.
This can be supported via digital tools, which will include pension dashboards when they are rolled out, and apps. However, employers need to carefully consider the digital literacy of their workforce to ensure these tools are used effectively, the report said.
Pension providers have responsibilities to provide accessible information, the report stated, and to develop online tools and apps, and offer product formats that enable clear comparison.
Easier product comparison
The DWP report said there was a “potentially important” coordinating role for central government to establish community and multi-agency networks that can engage with hard to reach or “seldom-heard” sections of the pension audience.
It said that the government could also encourage pension providers to make it easier for members to understand and compare products and see how their product is performing. In addition to this, the government could work more closely with pension providers and the wider financial sector to rebuild trust in the pensions ecosystem.
Rob Hillock, senior manager in the Personal Financial Planning team at Broadstone, said: “We welcome the DWP’s commitment to addressing persistent challenges around pension engagement and it’s encouraging to see the new pensions minister [Emma Reynolds] focusing on this critical issue.”
‘Tangible steps’
Hillock continued: “However, as always, actions will speak louder than words. The collaborative approach outlined in the report must now translate into real, tangible steps that improve engagement among pension savers and lay out a clear role for employers in supporting this agenda.
“With the chancellor focused on ‘productive finance’, ensuring that individuals not only trust the pensions industry to support them along their saving journey but also remain actively engaged is essential to delivering better outcomes for savers.”
