The pensions industry has been grumbling for some time now about what’s next for automatic enrolment.
There’s no disputing the fact that it’s been a great success. By “the end of November 2022, over 10.8 million workers had been automatically enrolled” according to the DWP. That’s quite some achievement.But, while automatic enrolment has largely met its objective of getting more people saving, its impetus petered out by 2019, when contribution rates stopped escalating. And at present it overlooks those who are under 22, make little money or spread themselves across multiple, low-earning jobs.
The industry has been calling for further action for quite some time, with particularly strong recommendations from the Association of British Insurers (ABI) and the Work and Pensions Committee within the last year.
MPs have tried – and failed – to get the DWP to listen. That is, until a Private Members’ Bill was brought forward at the end of February. The bill itself stops short of increasing contributions, but it does provide the legislation the government needs to make other, much needed changes. Once the law is passed, they’ll be able to lower the minimum age to 18 and remove band earnings, so contributions will count from the first pound earned.
At the time of writing, the bill still has a way to go before it is enshrined in law. It’s currently progressing through the Commons and will then need to get through the House of Lords, and as yet, no timescales have been attached.
But one thing’s for sure: if 18-year-olds are going to start saving into pensions, the industry needs to figure out how to talk to them. And it’s important that we get it right – these are a group of young people that we’ve never talked to about pensions before.
Gen Z were born in the late ‘90s and early 2010s. They’re ‘digital natives’, so they’ve only ever known a world with readily available wifi, smartphones and social media. They’re more likely to distrust big brands, and to be more conscious of social justice, as well as their impact on the planet. And they tend to source their information from influencers and from social media rather than institutions and traditional media.
In its report ‘Gen Z: Redefining Authority’, the strategic insights consultancy Flamingo noted that Gen Z “are simultaneously more exposed to the failures of traditional authority than ever, and more equipped than ever with tools to respond to it, to challenge it, and to make it work for them.” In short, they are a group deserving of some serious thought.
So where do we start? Here are 3 suggestions.
Firstly, find out what’s important to them. Nothing beats research when it comes to understanding your audience. We’re all guilty of making lazy assumptions about groups we don’t fully understand. We’ve now got an opportunity to find out what’s really important to a group we know very little about, certainly from a financial services and pensions perspective. Use it. Find out what excites them, find out what doesn’t. Find out where they go for information and who they trust. This will all be invaluable in a future comms strategy.
Secondly, get to the point quickly. We know that social media is changing the way that we view content. And that we have less time than ever to get our points across. No one wants to read pages of waffle about their pension before they find out how it’s relevant to them. I suspect that Gen Z will feel this even more acutely. So get to the point, quickly. And really challenge yourself to think about the shortest format in which you could present something.
Thirdly, use the platforms they use. Once you understand where Gen Z go for trusted information, plan to go there – however alien that might feel. Create content that sits naturally there. Learn from those who already do this well – there are a whole host of ‘finfluencers’ who have already mastered short, punchy videos on social media. Talk to them. Find a way to leverage this technology. And, most importantly, test approaches with your target audience, refine and test again. Keep repeating until you get it right.
Ultimately, greet this challenge as an opportunity. It’s a chance to rethink how we communicate, how we interact with our members and how we can keep innovating. Don’t sit around and wait for it to happen. Start now. You can guarantee that those with less honourable intentions will have started doing this already.