Using communication to break the ‘doom loop’ of pension speculation

HR leaders need to start helping employees make pension decisions based on facts, not fear, says Steve Watson, director of Policy and Research at NatWest Cushon.

We’re all familiar with the real estate mantra: location, location, location. But what if workplace pensions had one of its own? Here’s how it should go: communication, communication, communication.

Why do I think communication is so important? You only need to look at recent events, such as the Autumn Budget and its news cycle, to give you a clear idea of why. Because the fact is that far too many people were making pension decisions based on rumours rather than facts.

Take, for instance, the rumour that the Chancellor would reduce the 25% tax-free lump sum. Here, people across the country were in danger of making irreversible pension decisions long before anything was even announced – based purely on speculation. The headlines dominate, the details are lost, and before you know it, misinformation has spread like wildfire.

Without the facts, employees right across the salary spectrum react, even though they might not be affected. And as sure as eggs are eggs, the ‘doom loop’ of speculation will start up again in the next Budget cycle. So, what are we going to do differently?

The headline trap

It’s easy to understand why people panic. A headline reading: “Chancellor eyes £2bn raid on pension tax-free cash” doesn’t exactly come with nuance. It doesn’t tell us that any changes would likely include protections, transitional arrangements, or thresholds that exclude most savers. Mostly, it just triggers fear. And fear, unfortunately, makes people act.

The FCA’s data has shown significant spikes in pension withdrawals in the run-up to recent Budgets – not because policy had changed, but because people were worried it might. That’s money being accessed early, tax implications being triggered, and retirement plans being disrupted – all for something that hadn’t even happened.

But this isn’t just about the potential for people to lose out financially. What’s really at stake here, however, is the erosion of trust in workplace pensions as a whole. If employees feel like the rules could change at any moment, they might disengage entirely. And that’s the opposite of what we need.

Facts not fiction

Pension providers such as NatWest Cushon have no interest in whipping up a frenzy among savers based on rumour. While journalists love to speculate on potential pension rule changes, we're there lobbying government to make sure that any changes won’t trigger knee-jerk reactions from savers.

For example, while we know government can’t comment on speculation, they could make it clear that any changes would be phased in from future tax years rather than with immediate effect. This would go a long way to reducing the noise and fear around Budget cycles.

What better communication looks like

That aside, we need better direct communication with savers. We shouldn’t just hold out hope that employees will somehow find the right information themselves. We need to meet them where they are – proactively, clearly and calmly.

That means building a communication toolkit that works year-round, not just reactively when the rumour mill starts spinning.

In-app messaging: This is one of the most effective channels we have. If employees are engaging with their pension through an app or platform, that’s where they’ll see updates. Short, clear messages that explain what’s actually happening – and what isn’t – can really cut through the noise before panic sets in.
Smart nudges: Behavioural prompts can flag potential issues before they become mistakes. A well-timed notification that says, “Thinking about accessing your pension? Here’s what you should consider first,” can be the difference between a rational decision and one made in haste.
Webinars and expert access: Resources like these can give employees a chance to ask questions and hear the facts from someone who understands them. These don’t need to be complicated – a 30-minute session explaining a new policy or dispelling rumours for pension savers can do more than a hundred email updates.
Social media explainers: Let’s be honest – social media can be where a lot of misinformation can start. But it’s also where we can counter it. For instance, short videos that explain what’s actually happening, in plain English, can reach people in the places they’re already spending time. We’ve started doing exactly this on LinkedIn, and the engagement tells us people want clear, trusted voices cutting through the noise.

It’s time to get ahead

The annual Budget cycle is entirely predictable. Every year, people will make decisions about their pensions based on pure speculation. Some of those decisions will be wrong, some will be irreversible and many will be entirely avoidable.

There’s no need to wait until the next cycle begins. Better communication can start right now. The most successful employers build ongoing financial education into their engagement strategy, creating year-round awareness of how pensions work and how employees can make informed decisions when headlines start swirling.

Want to see how we help employers communicate better with their people? Head over to our Resource Hub, where you’ll find recordings from industry panels, webinars, and NatWest Cushon events – valuable resources designed to help employees make informed decisions about their pensions. And follow us on LinkedIn.