Ways that technology and data are helping to engage employees with their long-term savings

Getting employees engaged with long-term savings, especially younger employees, is a challenge for most organisations. The issue is the timeline versus more immediate and pressing savings goals – retirement can seem like a long time away when you’re in your 20s, whereas getting on the housing ladder, for instance, is a central focus that trumps an event that is possibly 30 years away.

So how can you get employees engaged with long-term savings, especially pensions, whilst they deal with more immediate financial needs?

A meaningful approach

The normal go to is communications. And although good, clear and relevant communications are important, communicating more about something that’s not a priority doesn’t change the financial needs pecking order, and so it does very little to encourage better engagement.

What’s needed is an approach that brings meaning to pensions today, not just in 30 years’ time. An approach that is data driven, where we’ve either asked people what issues concern them most, or we use behaviour and research data to tell us – and we respond accordingly.

For instance, our Pension Funds and the climate crisis research data shows that 84% of employees are concerned about climate change – what if their pension could help tackle this global issue? Although money in pensions can’t be accessed until age 55, it doesn’t mean it can’t be “used” in the meantime – it’s about harnessing the power of capital.

Making pensions a force for good – now that’s something that employees will pay attention to and engage with.

Bringing purpose to pensions

Two-thirds of all employees (62.9%) told us they would engage more with their pension if they knew it was making a positive impact on climate change. This increased to 73.8% in 16-to-24-year-olds. Climate change and pensions are inextricably linked, with the average UK pension member unwittingly financing 23 tonnes of CO2 emissions each year through the businesses in which their pension invests.

This is why we launched our net zero now pension – it provides an immediate purpose to pensions helping to engage younger employees who may otherwise feel distant from its primary use: retirement.

But it’s not just climate change that people care about, employees are concerned about other environmental, social and governance (ESG) issues such as animal welfare and gender equality. Our Pension Funds and the climate crisis research also found that 62% of employees want the opportunity to have a say in how companies that their pension invests in are run.

For wider ESG issues, it’s not just about capital, it needs technology to get employees engaged. For instance, using our app, our pension scheme members can vote on issues that matter the most to them and this feeds back to fund managers who ultimately hold voting rights at shareholder meetings. It allows for members’ voices to be heard and increases engagement levels by connecting employees with decisions in companies they’re indirect shareholders of.

Improving accessibility through technology

Technology is key to engaging employees, especially those who are younger. They want to be able to access and manage their pension in the same way that they manage most other things – via an app. Our research found that if employees could manage their pension via an app, 66% of all employees, and 82.6% of 16-to-24-year-olds, would engage more. Not only does an app enable the delivery of immediate value and in turn increase engagement levels, but it also helps reduce the impact of pensions on the environment. Technology means an end to reams and reams of paperwork that is not only bad for the environment but does nothing for engagement levels. Only 32.5% of employees actually thoroughly read through any paperwork while the majority either don’t read it, skim read it and file it or throw it away. It’s adding no value but is damaging the planet.

For most other things, employees are used to receiving correspondence directly through an app in “bite size chunks”, so why not their pension? For instance, through our app, employees receive nudges to alert them when something related to their savings targets and investments needs to be reviewed, providing them with the confidence that their investments are being monitored but also prompting them to engage when necessary.

The pensions industry could be accused of lagging behind other sectors when it comes to embracing tech and using it to improve accessibility and engagement levels, and that needs to change. If you want to improve engagement levels, providers must give pension members what they want – a product that means something to them today and is tech-based.

Ultimately, we need pension members to be saving more, but this can’t be at the expense of the environment, and it won’t continue without adoption of innovative tech.

The author is Steve Watson, head of proposition at Cushon.

This article is provided by Cushon.