Judged by the number of people now enrolled in workplace pensions, the Auto Enrolment initiative has been a success. Opt-outs are lower than originally anticipated validating the nudge approach to start people saving. However, will this momentum continue once minimum contribution levels are automatically increased in April 2018?
CTC produces personalised member communications and online tools including (currently) personalised video statements for scheme members.
We have been working with pension schemes to improve staff communications focusing on the benefits of increased contributions rather than seeing it as a cost. Next year’s jump in the deduction from pay will be very noticeable and, as generally there is distrust in pensions, it will call to question whether it’s worth it against other financial pressures.
llustrations and annual projections do show the future value of someone’s pension but I would suggest are largely ignored – not helped by the presentation format. Worse, many schemes have produced annual projections which are misleading because they do not take account of the future increase in minimum contributions. Someone taking the time to read their annual projection might well think contributions are going to continue as is. Even worse, they likely think the current minimum contribution will give them an adequate retirement.
Our clients are now using various forms of digital and on-line communication to explain exactly what someone’s pension will mean to them. Whether on paper or interactively, there are two key things we have been using to keep nudging and reinforce value (see illustrations).