Communicating with a workplace pension member each time a contribution is made seems like a simple concept that could prove invaluable in boosting member engagement. However, almost half of workplace pension providers do not do it. In our latest insight we investigate the value of these messages and which providers can facilitate them.
Offering a high-quality workplace pension can be critical to a business attracting (and keeping) the best employees to their workforce, with 69% of workers surveyed by the CBI survey, 2018, saying a firm’s pension scheme is an important factor when looking for a new job.
Engagement is key when demonstrating the value of a workplace pension to current and potential scheme members. However, many employers lack the resources and/or knowledge to be driving regular messages to boost engagement levels themselves. If you are not communicating to workplace pension members frequently, they will have low engagement levels, so what can providers do to help employers drive levels of engagement with the scheme upwards?
What better way is there to demonstrate the value of a workplace pension and drive engagement than telling the member each month when money is added and them seeing it grow?
The value of a workplace pension is especially prominent and can be a strong driver of employee satisfaction. When members can see contributions from their employer and the tax relief they also benefit from, many will see this as “free money”- a very popular concept!
For example (see below chart), take a member earning the UK average wage (£26,782) and contributing the statutory 5% employee contribution. Their 5% per month grows to 8% once the employer contribution (and tax relief) is added. By communicating the contributions (and breaking these down) each month they are made, the member can see clearly the value being added by the employer and the tax they are saving.
However, our data shows that almost half (40%) of workplace pension providers do not communicate/inform the member each time a contribution is made to their workplace pension policy.
The workplace pension providers who do communicate with the member each time a contribution is made to their policy are Aegon Master Trust, Aegon Workplace ARC, Fidelity, Fidelity Master Trust, Mercer Master Trust (Aviva), Mercer Master Trust (Scottish Widows), Royal London, Scottish Widows, Scottish Widows GSIPP, Scottish Widows Master Trust and True Potential.
When sending regular communications, it is also important to consider the medium in which is it delivered in addition to the value of the contents of the message. The effectiveness of a message is very dependent on it being delivered in the manner in which the workplace pension member likes to receive communications around their finances.
Businesses, including most of the consumer finance sector, are pushing ever more towards a paperless society as people become more aware of the effect of paper consumption on the environment. Therefore, it is not surprising to see that no workplace pension provider currently informs the member via post each time a contribution is made to their policy.
SMS/text would seem to be good for driving up engagement, but no provider currently does this. Which begs the question is this because they do not have up to date mobile numbers, or maybe they are deemed unsecure?
Email is another form of digital communication which the majority of workplace pension members are comfortable with. However, our data shows that only two providers (Mercer Master Trust Aviva and True Potential) communicate with the member each time a contribution is made to their policy in this fashion.
The main medium by which workplace pension providers are communicating contribution information to members is via member portal or mobile application. Our data shows that all of the providers who communicate to the member each time a contribution is made are sending out communications via member portal or mobile application.
In 2019, 73% of Brits used online banking on a regular basis, in comparison to just 30% in 2007 (Statistica surveyed UK adults in September 2019, asking if they had used online banking in the past three months). As more of us get used to managing our finances online, more workplace pension members expect to manage their schemes via a portal or an app. Therefore, generally messages about regular contributions are most effective when received via the member portal or app as this is how most workplace pension members engage with their pension.
Push notifications and secure messages have been shown to boost member engagement and have been used by banking providers for a number of years.
Our data shows that all workplace pension providers other than Hargreaves Lansdown have the functionality to send push notification messages via their app. Aegon Workplace ARC are the only provider not to have a member app.
Overall, whilst our data shows that over half (60%) of workplace pension providers do communicate with members each time a contribution is made, providers could be doing more to get this message across to members.
Engagement with members is key for employers who want to demonstrate to their employees (and potential hires) that their workplace pension scheme adds value for its members and to driving better savings and outcomes. There is no better way to demonstrate the value of a workplace pension than showing the member when money is added and helping them see their retirement fund grow.