How to re-engage employees with pensions savings after coronavirus

Throughout the coronavirus crisis, our focus has been on the short term. The government’s daily briefings gave us updates from the past 24 hours and set out the plan for the next few days or weeks. And as individuals, our focus has been on our own immediate needs, not planning for the future.

Pensions and financial wellbeing is one of the key themes at this years’ virtual Employee Wellbeing Congress. View the full agenda and opportunities to join discussion groups with your peers or register here to attend.

This general short-term focus is something that may prevail for some time. Family finances may need to be repaired and job security may be an issue. Against this background, it seems like an uphill task to re-engage people with pension saving…but what can providers, employers and trustees do?

One opportunity for engagement comes from our experience of lockdown. For millions of people in the UK, coronavirus brought home just what life without work looks like – something they may never have experienced before. From a financial perspective, the security of an income was replaced to a greater or lesser extent by reliance on the state and savings. At the same time, people have had the opportunity to reflect on their work-life balance. If they’ve been furloughed, they’ve had to find ways to fill their days within the limitations of reduced pay and controls on their freedom to engage socially.

A taste of what life after work may be like

This insight into life without work provides an opportunity for us all to envisage life after work. What might it be like to be furloughed for the rest of your life? And how would we fund the freedoms we’d want to enjoy? Encouraging people to reflect on their recent experience could pay dividends when promoting the need for a retirement plan.

While we can encourage engagement with retirement planning, we can’t ignore the fact that, for many, the financial uncertainty of an expected recession may be an insurmountable obstacle when it comes to making meaningful changes to the amount they save for retirement. But engagement isn’t simply about paying more in. It’s important that employees value their scheme, and that they trust it as a place they can grow their pension fund.

Again, coronavirus gave us an opportunity to evidence how diversification within default funds can protect the value of savings in workplace pensions – especially for those closer to retirement. It’s an important proof point for inexperienced investors who may not trust the markets.

We also need to recognise that the coronavirus crisis has produced a huge range of different experiences for different people. Some have worked from home and will continue to do so, avoiding a costly commute. Others have been furloughed or seen pay cuts. Households with self-employed members may have been impacted in many ways. There’s no ‘one-size-fits-all’ solution, which is why it’s important to make sure that communications aimed at engagement are relevant to the recipient. Employers will be aware of what happened to their employees, but segmentation models may be useful to overlay the context of a household.

Employers and trustees may decide that some subjects should be off limits for a while, but that doesn’t mean engagement activity needs to stop. We’ve mentioned the opportunity to have a conversation about a plan, but conversations about investment choices or consolidation can drive engagement without increasing costs. How many people took the opportunity to sort out their cupboards during lockdown? There may be an opportunity to promote the idea of sorting out old pensions too.

Moving faster towards online communication

What we say is only part of the engagement equation, of course. How we communicate is just as important, if not more so. Coronavirus has again proved to be the mother of invention, accelerating the move to online communication. Online financial education allows greater reach where employees are web enabled. It not only facilitates interaction for those able to attend a live event, but can also encompass a catch-up service for those who prefer to access information at a time that suits them best.

Whatever engagement is planned, the most important consideration is that the activity works for each group of employees. The challenges facing employers are as varied as those facing individuals. This means that engagement activity needs to work within the context of an employer’s wider communications, especially where difficult decisions are being made. For this to succeed, employers, trustees, advisers and pension providers need to work together to produce a coherent plan. By doing this, parties can ensure that activities are complementary and that engagement with long-term saving is improved…regardless of short-term challenges.

The author is Dale Critchley, policy manager for workplace savings and retirement at Aviva.

This article is provided by Aviva.

Ally Antell, UK health & protection product innovation lead and Lisa Ost, UK employee wellbeing lead, both from Aviva, will be speaking at the Employee Wellbeing Congress on 23^rd September at 10.15. Their session will include a case study looking at how to move the dial on mental self-awareness and emotional intelligence in your workforce.