This blog accuses the majority of the pension industry of being “tone deaf” when talking to its customers. We are about to embark on a pension attention campaign, the messaging for which is “tone deaf”. We are asking people to do something they have no means to do – to save more for longer – we must rethink the campaign now.
Commentators have queried the timing of the pensions awareness season starting later this year, which will take place during a mounting cost of living crisis ravaged by high inflation, surging energy bills and flagging consumer confidence – https://t.co/qPfAQTseKW@PensionAttn pic.twitter.com/b9jZSMs4aW
— Pensions Expert (@pensions_expert) August 22, 2022
It’s not just me that’s saying it – this Pensions Expert article shows that more pension professionals are asking for our message during this “pension awareness season” to be delivered in a different tone.
Have you been considering pausing your pension contributions? For some, skipping pension contributions will be a better choice than skipping other things. Read our take which gives you all the facts https://t.co/mxgWx0zjeI #PAD22 pic.twitter.com/iaDPdNV0wy
— Pension Awareness Day (@PensionDay) August 23, 2022
Canada Life have surveyed their customers. One in 20 UK adults said they had stopped their monthly company pension contributions in response to cost pressures. A further 6 per cent of the 2,000 respondents said they were considering pausing their pension saving, while a further 9 per cent might consider doing so in the future. That’s 20% of all savers putting their retirement plans “on hold” while they wait and see what the Government are going to do to bail them out.
Here’s how I’m hearing responses from those quoted by the FT hearing the news
Who are these weirdoes who put paying bills before paying into pensions? How very dare they?
I’m not talking about being out of tune with each other, I’m talking about the people we never talk to (except if we’re being chauffeured around in a taxi).
Here’s a case study of the kind of person our industry likes to think are customers.
Canada Life’s modelling found that a 40-year-old earning £50,000 a year who paused pension contributions of 8 per cent for one year would have about £15,000 less in their pension by the time they retired at 67.
But that’s so tone deaf! £50,000 pa is way above average wage, living wage let alone minimum wage. People earning £50k pa may struggle to pay the bills but they have financial resources to recover. If you lose your credit rating , your electricity and gas and if you have to stand in a queue for a food bank you are not worrying about replacement ratios at some theoretical retirement age (67?).
The FT article goes on to explain the potential savings people can make using salary sacrifice but these tax and NI savings are for those who privileged to be in well run schemes where employers share the savings. Most people in absolute poverty will not be benefiting from such munificence. Many will still be overpaying contributions because they are in net-pay schemes which are denying them promised savings incentives.
I’ve been saying for months that the correct response of the pension industry is not to encourage people to pay more, but to help them pay their household bills. That means encouraging HMRC to pre-pay net pay rebates in 2023, helping people who cannot afford to be in a pension , to minimise the cost of pausing. Making sure that those who have access to their pensions, drawdown rather than default on their fuel payments.
And I’m pleased to say the message is beginning to get through, at least to some large employers.
I learned yesterday that one has decided to ditch a campaign to staff around turning down “free money” by not paying more into the staff pension scheme. It feared that its unions would accuse it of being “tone deaf” to the greater needs of staff struggling to make ends meet.
I am not saying the timing of the pension awareness/pension attention season is wrong – I am saying that the messaging is wrong – the tone needs to be less exuberant , more respectful, less hectoring, more attentive.
Changing the message, changing the tone
These are the people we’re supposed to be making aware of pensions. I’ve done it before, with the pension geeks (good people). Jonathan Bland and Rachel Parkinson who took all the risks back in 2014 when they set things up – this blog salutes you. Jim Biggs and all those who have driven the campaigns forward over recent years I salute you. Guy Opperman who gave up his weekend to help out on the bus in Peterborough , I salute you too.
The geeks listen, because they get out and talk to people in person. They are a lightening conductor to what people are actually thinking about their pensions . I love this messaging board from a couple of years back.
This is what I wrote in a blog at the time! I was learning!
We talked about saving more – they asked about what they’d get from saving
We talked about investment – they wanted to know how their money was doing
We talked about an income for life – they ask if they could take their money from 55
The big blue bus and what it did.
You can’t stand in a windy corridor in Westfield or a square in Peterborough without meeting real people . In 2016 people were gong through enforced austerity, but joining workplace pensions as never before.
Today there are 10.5m new savers in the system and whatever austerity did, this cost of living does it cubed.
Frankly, if the messaging coming out of the bus is “save more for longer” , I wouldn’t want to be on the bus. Which is just as well as this year – there is no bus. Instead there are a series of “live shows” which are Zooms – good but not that good.
It seems that some of that remarkable spontaneity has been lost, I hope the Geeks will convince its sponsors to pay to get that bus back on the road!
Sunlight behind the storm cloud.
Dark as the skies are looking , we know that storms blow over. But while it rains, we need to take cover.
Pretending that people, getting meagre pay rises will be able to cope with rising rent, rocketing fuel bills, increased mortgage payments – not to mention increasing shopping costs – is daft.
The current messaging for the pension awareness season is wrong. It’s tone deaf.
Let’s make sure people take cover today but see the light behind that cloud.
The answer is simple. Nothing happens until someone sells. The client facing adviser has been removed from the action by well-meaning regulation so the problem of allocation of discretionary spend has not happened since 1988.
Now the discretionary spend is under attack from the fruits of declining productivity and instant gratification funded by borrowing from the future you will find that even workplace pension will see an increase in opt outs