18 Jun 2021

Re-thinking pensions engagement to break through behavioural barriers and save for the long-term

Since 2012, auto enrolment has enabled millions of UK workers to save into a pension, but the sense of inertia still remains. Although many workers now accept pension-saving as the norm, it doesn’t directly translate into assuming personal responsibility to ensure that they will have the kind of retirement that they wish for.

In addition, many workers who have been automatically enrolled may not know which pension provider their employer has selected for them, or understand what their options are so that they can make informed choices about how they save.

So whilst auto enrolment has successfully managed to get more people saving, the challenge is now to effectively increase pensions engagement. This starts with building basic familiarity, trust, awareness and confidence, which are important precursors to tangible behavioural shifts when it comes to long-term pension saving.

Perception vs reality of pension saving

There are behavioural barriers that contribute towards this sense of inertia and can be tricky to navigate when getting workers to engage with their pension; people naturally shy away from things that might be perceived as complex, scary and costly, which are common pension myths. This is particularly true with young and mid-career workers who are likely to “live for today” and have a lack of perceived affordability to save for the distant future, thus creating psychological distance.

Our latest annual consumer research, conducted in December 2020, also revealed an increase in the number of workers with low confidence in their own retirement saving plans over the past year; only a third of those surveyed feel that they are saving enough into their pension, yet a large majority still expect the same pension pot to sustain them in retirement. All this shows that there is an apparent disconnect between awareness, confidence, saving behaviours and future plans.

Overcoming the challenges

So, what can be done to help workers close the gap between what they imagine retirement to be like and the reality of what their retirement will actually be like, based on their behaviours today?

For starters, it’s important to be clear and proportionate with our expectations. Rarely will someone go from being passive and disengaged to making active choices about saving from just a single piece of engagement – it’s a journey, and no two saving journeys are the same.

At Nest, we believe that supporting employers to have conversations about pensions in the workplace can make a real difference, by helping them convey simple and timely messages. Alongside our own member engagement activities, employers can also help to balance out individual journey anomalies and encourage workers to take actions that will improve their retirement outcomes.

This is why we’ve created a video series with Will Sandbrook, insight director, and Aniko Chen-Nagy, senior marketing manager both from Nest, that offer tips on effective pensions engagement and provide employers with the tools to put it into practice.

To watch the series, how to talk to your workers about pensions.

This article is provided by Nest.