If you don’t know Michelle, then you should. She is the living, breathing soul of TPAS, an actuary who has forgotten how to be boring and a restorer of confidence in pensions.
As the photos on this blog suggest – she seems to have got younger for her time at TPAS. As my recent blog confirms, going to TPAS and TPAS-Pensions Wise can make you younger too!
Anyway – here she is telling us in a great blog not to tell each other what to do!
After TPAS
Stop telling people what they should do!
My heart sank yesterday when I read another piece of research stating that only 1 in 7 people are saving enough in their defined contribution plan http://www.professionalpensions.com/professional-pensions/news/2474335/just-one-in-seven-dc-members-are-saving-enough
Why do we do this?
1. British people hate being told what to do.
We queue very politely but turn up at a bus stop that says “Queue on this side” and we spread all over the pavement! Another example is the requirement to obtain regulated advice if your DC pot is £30k with safeguarded benefit. If I had a £1 for every customer that has contacted us to complain about this rule, I would have a great pension pot! Yet, over 50% of our customer think they may take advice when we have spoken to them about all the things to consider?
2. On average, our customers have 2 DC pots and this is set to increase.
Does this research look at total retirement income position – State, DB, DC and other investments? If not, the headline is sensational but not accurate.
3. Why give someone a problem and worry?
It is a very negative sell.
Step 1 – start by helping people make the most of what they have got – are they in contact with all their pensions, will they get the maximum from the State, are they taking advantage of the employer matching contribution.
Step 2 – ask them how much they can afford and how little this will actually cost them when you allow for the tax and possible NI saving.
Step 3 – encouraged by the positive results of Step 1 and Step 2, the customer takes this step by themselves by saving some more.
We should stop telling people what they are not doing and help them do what they need (and often) want to do.
Before TPAS
at a high level it is much better to tell people how to achieve success rather than telling that what they are doing isn’t enough. but it’s more complicated than step 1 and 2 since most people won’t then take step 3 – even if they are Showaddywaddy fans.
I think Michelle’s points are spot on. In our experience delivering education to employees around pension saving, clear explanations of starting points, where they are heading now if they continue current saving rates, and how small changes can impact their potential outcomes, gives people the enthusiasm and will to engage with their pension saving, and increase rates. Perhaps rather than telling people what to do, we should be making the education piece mandatory, and we’d get to where we need to be in a much more pleasant way!