With just a few months to go before millions begin saving into a pension for the first time, the pensions industry faces an enormous challenge to understand how to communicate with this new generation of savers.
Today (Tuesday), NEST initiated a debate on how the industry might tackle this challenge with the launch of eight Golden Rules for talking about pensions in the context of automatic enrolment, developed following four years of research among people who will be affected by the reforms.
Latest figures suggest that up to eight million people will be saving for the first time or saving more in all forms of workplace pension once automatic enrolment takes effect. Between two and five million people are expected to become members of NEST.
NEST Chief Executive Tim Jones said:
‘Automatic enrolment is designed to kick start a saving revolution.
‘NEST has spent a lot of time getting to know the new savers that pension reform will affect and our findings suggest clear communications are important if we want people to feel good about being in a pension.
‘NEST's Golden Rules are based on extensive research into how people think and feel about their money and how they want pensions explained. This includes, for example, explaining that people have a right to a pension at work, rather than saying it's something they ‘should' do.
‘Our eight Golden Rules aren't the only answer but we hope they'll be interesting to anyone who'll be communicating with this new generation of savers.'
Quotes from event panel members:
Will Aitken, Senior Consultant, Towers Watson, said:
‘NEST's eight Golden Rules represent an excellent and overdue overhaul for pension communication ground rules. Some existing member communication could benefit from adopting the rules, particularly key features documents for contract-based schemes.'
Sarah Brooks, Director of Financial Services at Consumer Focus said:
‘This is a major change for millions of people, so it is important that people understand exactly what automatic enrolment will mean to them. Part of this will be down to the pension industry which clearly has a big role to play in encouraging people to save for their future.
‘Many of the employees involved will not have had pensions before, so we very much welcome the work that NEST is doing on its Golden Rules. It is crucial NEST and the rest of the industry effectively communicates the benefits of the scheme so that everyone can get the maximum out if it.'
Stephen Ingledew, Managing Director, Corporate, at Standard Life said:
‘2012 heralds the start of auto-enrolment and the beginning of a great opportunity to re-engage people in long term saving. One of the biggest hurdles we face is the ability to communicate in a way that people find meaningful, so NEST's research in this area will be invaluable in helping people see how pensions can work for them.'
Tom McPhail, Head of Pensions at Hargreaves Lansdown said:
‘The success of auto-enrolment in turning round the pensions crisis will rest in large part on getting the right messages across; this research and these Golden Rules will help to make that happen. NEST should be applauded for addressing this hugely important and oft-neglected aspect of pension provision.'
Quotes from consumer groups:
Richard Lloyd, executive director of Which?, said:
‘Consumers need clear, comprehensive information so we welcome this guide from Nest.
‘Removing jargon like 'trivial commutation', 'with-profits' and 'adventurous return' will help people understand the significant changes that are being introduced in the pensions market and make the right decisions for them.
‘Alongside greater accessibility for consumers, we also want to see clearly defined minimum standards to protect consumers from being automatically enrolled into poor value schemes.'
NEST's Golden Rules for communications:
1.Keep it real: Use examples people can relate to and avoid abstract concepts.
2.Rights not responsibility: Tell people what they're entitled to not what they should be doing.
3.Out with the old: Make pensions relevant to their lives now and don't focus on the details of retirement.
4.One for all: Make it clear automatic enrolment is happening to most workers, not just them.
5.Tell it like it is: Present the facts and avoid ‘spin'- people want to make up their own minds.
6.Give people control (even if they don't use it): Tell people about their choices and not that everything's done for them.
7.Take people as you find them: Give people access to information that matches their knowledge and interest.
8.Be constructive: Tell people about solutions, not problems or scare-stories.
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