COVID-19 and scheme members: Marrying engagement with action

Ask anyone who works in defined contribution (DC) pensions what their top-three career conundrums are, and I will be shocked if the phrase “member engagement” doesn’t come up at least once.

‘Engaging’ can be enraging

Although the concept behind ‘member engagement’ is age-old – to keep members informed and interested along their savings journey such that they maximise saving – it has been described in many different ways across the life of the DC market.

From “educating” and “communicating” to “engaging”, industry leaders, asset managers, trustees and scheme managers have repeatedly tried to democratise their language. They’ve had frustratingly little success in encouraging people to stay up to speed and save more over the years. It’s been the biggest challenge facing the industry during my career, over which time providers have spent millions on developing different engagement channels and online tools.

Not such a remote possibility

Fortunately, the time, effort and investment spent on developing these channels and tools has stood the industry in good stead to meet some of the vast challenges brought about by the coronavirus pandemic.

Tools including online portals and pension viewers, chat bots, virtual assistants and web help sections, among other initiatives, were conceived when the industry was trying hard to pique members’ interest. They have become extremely useful to savers who now have to rely on remote means of communication.

At LGIM, we’ve seen an increase of 25% in online registrations, with one of our clients experiencing a boost from 2,500 to over 7,000 members opting to go online year-on-year until the end of May.

Members are also keener than ever to access their pensions remotely. Versus the same time last year, we’ve seen seven times as many people use our secure portal year-to-date until May 2020.

It’s these new ways of members accessing their accounts, increasing the feeling of ownership and connectivity to their pensions, which may have contributed to the fact that we have seen slightly lower opt-outs between January and May than last year and stable contributions over that period.

It also seems that members are interested to learn more as, where we switched to virtual presentations during the pandemic, we have seen a 50% increase in attendees in May compared to in-person presentations.

Switching on to pensions

It’s great news that engagement is finally increasing. But this is no time to rest on our laurels, and presents an opportunity to do more.

Our recent member research highlighted that the diverse experience of different generations has influenced their attitudes and priorities with regards to environmental, social, and governance (ESG) considerations. It’s clear that this applies more generally to each and every individual’s approach to their finances.

For older generations, retirement is imminent and the abstract numbers on the page (or screen!) are starting to take on a more concrete meaning. These generations may still have some defined benefit (DB) income they are able to draw on in retirement. So, for this group, support around decision making will be massively important.

Younger generations are potentially becoming switched on to the fact that their retirement savings are likely to be one of their biggest assets, but also that income after they stop work is unlikely to come from just one source. They will need to consider all of their wealth when calculating how to pay for retirement. This group still has the opportunity to do something to improve their outcomes. In particular, younger members who may not have given their retirement a second thought may now be examining their savings as they realise that access is simpler and easier than they presumed.

When words speak louder than actions

So now, more than ever, ensuring that messages are targeted, timely and personalised is hugely important to maximise engagement and impact. We also have a unique opportunity to increase confidence in pensions, improve saving levels, and ultimately, boost retirement outcomes.