Henry Tapper
Government messaging on COVID-19 has ranged from effective to baffling and the consensus is that it works best when simple. While Sage might be agonizing over strategy the early messages about staying at home, keeping your distance and saving our NHS were adopted by everyone.
No matter the turmoil behind the scenes, so long as the messages were consistent, we could believe we were all in it together. That social cohesion got us through the worst days of the first wave.
We need to create that social cohesion in our pension messaging too. Later life issues are to the fore as many in their fifties come off furlough and face the alarming prospect of at best a career break and at worst early retirement. This generation is also facing the trauma of the crisis in long-term care crystallized by the pandemic. Retirement planning must take into account not just our health but the health of our parents.
I have been spending time looking at the messaging from the Australian Government on “Super” and I’ve been struck by the simplicity and lack of spin. It has created a “pension calculator” which focuses on retirement income. The message is simple “If you’re on the path to or through retirement, you will want to make your money go the distance”.
The calculator offers to “help us find out our income when we retire”. While I am sure Australian policymakers worry about the assumptions behind the calculator and debate concepts such as partial retirement, the integration of savings and pensions and how to present different pensions , the inputs and output took me in total four minutes.
In four minutes I was able to see what I was likely to get in retirement if I was an average Australian. And – as I understand it – the average Australian likes this calculator and uses it when thinking about when they will be able to stop work.
Thinking back over the past ten years, I can think of two genuinely brilliant pensions messages. The first was when pensioners illustrated being “stripped of their pensions” by stripping off and hiding behind the eponymous banner. The second was a statement by the Chancellor in 2014 “from this day forward nobody will have to buy an annuity again”. These are messages that heralded major changes; I wonder whether we would have had popular support for the PPF and Pension Freedoms without the focus on these statements.
This kind of simplicity is difficult, not because it needs a lot of programming and APIs and the like – it doesn’t. It is just plain hard to put out clear messages without being criticised for over-simplifying.
My worry is that while the great pension infrastructure project – the pensions dashboard, is under construction, the challenges that the dashboard will help us meet, may be ignored.
We know that small pots are bad for people and bad for providers but since we abandoned the “pot follows member” initiative there has been little messaging around pot consolidation.
And we know that people want to understand whether they are getting value for the money they put into pensions but we still haven’t figured out a message that tells them the amount they are paying for their pension to be managed.
Perhaps the most relevant of the COVID-19 messages for pensions is “follow the science”. If we provide people with facts rather than value judgements we can’t go far wrong. The FCA have a brilliant statement on this which should inform every statement we make on pensions.
“the provision of purely factual information does not become regulated advice merely because it feeds into the customer’s own decision-making process and is taken into account by them”.
Sticking to the facts keeps things simple and keeping things simple is the secret to effective communication. We can engage with simple facts and when we engage we can learn to take the difficult decisions that lie ahead.
This article first appeared in Professional Pensions here
