The industry needs to look beyond traditional pension products and offer more personalised solutions that can adapt to the diverse needs of today’s workforce.
This was one of the main conclusions drawn at a recent round table event, looking at the financial planning challenges facing an ageing population as they approach their ‘second 50’. Consultants attending the event highlighted the importance of using a broad range of financial tools suited to different life stages and circumstances. This can help address socioeconomic disparities, and ensure support for individuals with neurodiverse or accessibility needs, while utilising the latest technology to boost engagement.
Holistic approach
Hymans Robertson personal wealth client director James Smith said employees need more than just a pension, with sidecar savings and support towards housing costs being a valuable addition. He said this is crucial if employers are looking to support different generations and socio-economic groups, who may have different approaches to saving and financial stability.
Smith said incorporating sidecar savings with solutions like wage streaming can boost engagement. For lower earners wage streaming provides more immediate financial help, driving higher engagement, making it easier to introduce pensions into the broader financial strategy.
But those at the event said that the pension industry also needs to think about its messaging, alongside product innovation.
Gallagher head of wellbeing Andreas Hunter said there was a need for more compassionate financial guidance, noting that ‘telling people off’ does not foster either engagement or trust.
“We spend so much time telling people what they should have done, without helping them understand how to move forward, or giving the tools to address these issues.” He argued that it’s time to rethink long-standing financial practices. “We’ve been doing the same thing for decades, but it hasn’t worked — maybe it’s time to try something new.”
Hunter said that there is often a mismatch between the pensions industry’s messaging and how people feel when they think about their retirement savings. The pension industry might like to promote positive messages that talk of ‘empowerment’ but he pointed out that many people feel overwhelmed or regretful when it comes to saving for the future. This mismatch makes it difficult for many to engage he said.
Hunter also highlighted the importance of making financial messages relevant to people’s experiences, especially when dealing with complex issues, stressing it was important to talk about more than just pensions when looking at wider issues of financial wellbeing and saving for the future.
“When you’re a hammer, everything’s a nail. We look at things from a retirement point of view, and our health colleagues look at things from a health point of view. But this is not how people’s lives run. That is not taking a human-centric approach to these issues, when we are talking about multi-faceted, complex issues. Without acknowledging that, we’re never going to untie this Gordian knot.”
Secondsight managing director – employee benefits consulting Gavin Zaprzala-Banks said that while there are a range of very effective financial wellbeing tools and resources, a more holistic approach is needed from providers. “There needs to be innovation,” he said, “but this needs to be a lot broader than product solutions.”
Smith pointed out that a narrow focus on pensions is “blinkered.” Instead, financial planning and retirement solutions needs a more holistic approach, integrating elements such as financial literacy, long-
term savings for housing, and care needs.
Smith and Hunter both emphasised that people often juggle various financial priorities, making engagement more difficult.
Andrew Barradell, head of workplace savings at Benefex, pointed out that many people believe that auto-enrolment contributions will be sufficient, so they don’t see the need to engage with pension planning. However, further pension savings may be required and this can present challenge, as people often prioritise other expenses instead, rather than increasing AE contributions beyond minimum levels.
This issue is further complicated by the fact that there are often significant differences in longevity across socio-economic groups said Heidi Allan, LCP principal head of employee and financial wellbeing. She said there can be a 27-year gap in life expectancy between these upper and lower groups.
“Communicating about retirement becomes complex when some affluent, healthy individuals might spend as much time in retirement as they did working, while others face drastically different realities. Balancing the need for instant gratification with long-term planning is tough. It’s easy to make decisions about today particularly as you feel the impact of those decisions now, versus the uncertainty of what lies ahead.”
The theme of diverse needs was further echoed by Mathar. He suggested that financial advisers should adopt a holistic approach, addressing not just finances but also health and wellbeing to help individuals take control of their future.
He also emphasised the importance of accountability in motivating people to seek personalised financial support, stating, “Accountability is why people start to seek out more 1-to-1 level of support outcomes.”
According to Aegon’s insight manager, Dr Thomas Mathar, personalisation remains key. He said AI should contribute to the effectiveness of this, helping firms tailor their communications, making pension information more relevant to the individual and boosting engagement. This might include using video messages for example which can directly relate to an individual’s own savings pot and goals.
He said it is becoming more widely accepted that developing tailored, compassionate communication is key to encouraging engagement, particularly with groups that may feel excluded.
Mathar said that this is a trend in retail advising, with advisers moving away from giving financial advice centred around pension, and towards a more life-centred strategy that includes financial elements. This change is also beginning to occur in corporate advisory, with a new emphasis on life-planning and coaching helping people match their financial resources to their objectives.
He noted: “Helping people identify what gives them gratification and purpose, then weaving financial discussions into that, creates a more meaningful and productive engagement.”
Communication
Allan underscored the importance of tailoring communication to engage with people from diverse backgrounds, noting that many individuals face difficulties accessing information. This includes neurodiverse individuals and those with visual impairments, mental health issues, dyslexia, and other learning difficulties.
She acknowledges that it can be challenging for some people to properly understand written financial communications. “We need to think about how we build knowledge and confidence, factoring in these complexities, to help people understand the financial challenges they face, both today and tomorrow.”
Allan said more people will be able to take charge of their financial futures if information is made clear and available in a variety of formats.
Verlingue head of employee benefits Sebastian Merritt also noted the challenges these groups face in terms of financial confidence and engagement.
“One in three of the 10,000 people we surveyed self-identified as having some kind of additional complexity when it comes to taking in, and receiving information.”
Smith mentioned the value of engaging with young people as well. He said: “We need to rethink our messaging to make it impactful. Many parents haven’t been able to pass on this knowledge because it’s new to them, too.”
He also emphasised the potential of using storytelling to emotionally engage people and the ability to make abstract ideas come to life via relatable testimonials, again making pensions more relevant to individuals.
Merritt agreed, and said there was value in using real-life case studies and personal stories when engaging
individuals and corporate audiences, noting that sharing experiences, particularly from senior figures, can help foster a sense of permission for others when it comes to acknowledging their own financial uncertainties.
According to Mathar using relatable role models can have long-lasting effects in shaping behaviours. He cited a study conducted in rural Ethiopia, where one group received traditional classroom education on practices like sending children to school and using fertilisers, while another group was shown documentaries featuring relatable individuals. The study found that the documentary group was more likely to adopt these behaviours, while the classroom group showed little change.
Disparities
Merritt highlighted the financial strain on the 40-60 age group, who are balancing retirement planning with supporting ageing parents. He emphasised that increasing pension contributions alone isn’t the solution, particularly for low earners, and called for greater state and employer involvement.
Smith also noted how changing generational expectations and attitudes towards care responsibilities can affect savers today. “Fifty years ago, inheritance and care looked completely different; now, people are balancing work and elder care in ways that previous generations didn’t face.”
According to Barnett Waddingham DC consultant Marie Blood, many people in the modern workforce believe they will receive similar benefits to their parents many of whom were able to take early retirement thanks to generous defined benefit pensions – and often lower life expectancies.
But this is unlikely to be the case for today’s generations of workers. She highlighted that as well as underestimating life expectancy, many do not think about their likely healthcare needs as they age.
She said: “There’s a difference between life expectancy and health expectancy, and while many envision active retirements, fewer than a fifth plan for potential long-term illness and care needs.”
Hunter added that these are seismic social problems. While he said the pension industry can do more to encourage people to plan for their ‘second 50’ he said this is an issue that also needs to be supported by state action.
Hunter added: “Our fertility rate in the UK is at an all-time low. These problems aren’t going anywhere. It’s getting even worse, and this point around ‘we should just increase pension contributions’, is not the answer.
“For us to just say you must save more, is not the answer. It needs greater state support or redistribution of state support. It needs greater state intervention with employers. We need to just be real.”
