Targeted support: Helping employees take the next step towards better retirement outcomes

Better engagement and more meaningful targeted support can help employees take positive steps towards better retirement outcomes.

Helping people achieve better retirement outcomes is about more than encouraging them to save. It's about helping them make informed decisions throughout their savings journey and giving them the confidence to take action when needed.

This is why targeted support matters.

Targeted support has the potential to help providers offer more relevant support to individuals who may otherwise do nothing. It can help people understand specific risks, recognise their available options and take the next step with greater confidence. Importantly, it is not designed to replace financial advice, but to make support more useful and accessible for those who need it.

While automatic enrolment has successfully increased participation in DC workplace pensions, it has also reinforced a "set-and-forget" mindset. Many employees remain at default contribution levels or rarely engage with their pension savings, even though millions are currently not on track for the retirement income they are likely to need.

For employers, this presents an ongoing challenge. Employees often receive information about their pensions, but many still need clearer and more relevant support to help them understand risks, navigate important decisions and improve their long-term financial wellbeing. Too often, support stops at warnings or generic information just at the time when people need greater confidence to take action.

Targeted support in practice

At L&G, we see the value of targeted support across the full member journey. Our first live use case focuses on members whose workplace pension savings are fully invested in cash. While this may feel like a lower-risk option, remaining in cash over the long term can leave pension savings unable to keep pace with inflation, affecting retirement outcomes.

Targeted support allows us to highlight that risk and provide a practical suggestion, such as explaining that people in similar circumstances often consider moving into their scheme's default investment option, while making clear that the decision remains entirely theirs.

Early testing suggests that this type of support resonates when it is relevant and easy to understand.

Before launching our cash-investment use case, testing showed that 85% wanted to read the materials (vs 67% industry average), 95% found them easy to understand (vs 79% industry average) and 93% were clear on the next step (vs 81% industry average) This demonstrates the potential for more connected and action-focused communications to help close the gap between information and action.

While our first use case sits earlier in the savings journey, we believe the greatest long-term opportunity lies at retirement. This is often when people face their most complex financial decisions, from navigating drawdown and annuities to understanding withdrawal levels and sustainability risks. Many need additional support to understand their options and make informed decisions about turning pension savings into a retirement income.

The opportunity is significant, but so is the responsibility

Targeted support will only succeed if it is rooted in genuine customer need and delivered with strong governance and oversight. People need to understand the difference between Targeted support and regulated financial advice, while retaining confidence in the support they receive. Trust remains fundamental to engagement.

Technology also has an important role to play. At L&G, we've spent years using data, behavioural insight and digital tools to make pensions more engaging and help members take action with greater confidence.

Targeted support builds on those capabilities, enabling more relevant support at the moments that matter most. Whatever technology firms choose to use, success depends on responsible implementation, strong governance and a focus on better member outcomes.

The industry has spent a long time discussing the potential of Targeted support. The conversation is now moving beyond implementation and towards impact. For employers and benefits professionals, that's an important shift.

Better engagement and more meaningful support can help employees make more informed decisions about their financial future and take positive steps towards better retirement outcomes.