The workplace intervention that can help close the pension engagement gap

Fourteen years after the introduction of automatic enrolment, the pensions challenge has evolved. The issue is no longer simply getting people to save; it's helping them understand whether they are saving enough.

L&G’s Decades Ahead research, which forms part of the company’s commitment to helping people achieve greater financial security over the long term, found that around nine million people aged 25 to 54 in the UK are not on track for an adequate retirement.

This points to a twin challenge: many people are not saving enough for retirement, while others are not engaging with their pension sufficiently to understand where they stand or what action they may need to take.

L&G’s research suggests employers play an important role in engaging savers, with the findings showing that, over the past year:

45% of people who turned to their employer for information and advice checked their pension balance, compared with just 29% of those who didn’t seek information from their employer;
21% increased their contributions, versus 11%; and
13% changed how their pension was invested, versus 7%

The workplace can therefore play a key role in helping to close the pension engagement gap because it’s one of the few environments where people regularly interact with their pension.

Encouraging positive pension behaviour

As part of its Decades Ahead initiative, L&G has launched a workplace pilot designed to test whether structured pension education can increase engagement and encourage positive pension behaviours.

The Building Future You pilot will take place with a sample of L&G employees. All participants will receive the same support, including short video modules, to help them understand their pension priorities and identify practical next steps.

Half of participants will be required to complete the Building Future You learning as part of their workplace experience, while the other half will be asked to complete it on a voluntary basis.

L&G will compare outcomes across the two groups and the findings will help inform future support for employers, workplace pension members and wider policy discussions on pension engagement.

While automatic enrolment has been hugely successful in getting people saving, participation doesn't necessarily equal engagement. Many people are doing the right thing by saving into a pension, but they often don't know whether they're on track, how much they might need in retirement, or what actions they could take to improve their outlook.

As a result of the pilot, pension education could be built into working life, delivered via employers, with employees expected to take part in the same way they might with other workplace requirements, such as health and safety training, rather than having to seek out support themselves.

Automatic enrolment showed what can be achieved when government, employers and industry work together to change behaviour at scale. Building Future You seeks to explore whether the same approach can be applied to pension engagement.

By bringing pension education into the flow of working life and meeting employees where they are, employers have an opportunity to help people move beyond simply saving for retirement to understanding whether they are on track for the future they want.