Advisers will have to reinvent their communications role from October next year as the roll-out of auto-enrolment prompts a fundamental switch in the messages that will be appropriate, said delegates at last month’s Corporate Adviser auto-enrolment forum.
Pensions experts at the event said the task of selling the idea of pensions to employees, in a bid to get them to join schemes, will evaporate when auto-enrolment forces them to join anyway.
This will lead to a rethinking of the entire comms message, said delegates, with questions over what they will be used for in future, what practitioners should be saying, and to whom. Advisers also questioned the extent to which employers will want to communicate to the new constituency of reluctant savers within schemes post auto-enrolment.
Steve Herbert, head of benefits strategy at Jelf Employee Benefits said he sees the change of role as a positive evolution into more on-going comms. He said: “Instead of there being only one communication ever happening, when people get enrolled into a scheme, because that’s when the industry makes its money, it’s actually going to become a more long-term education piece.”
Delegates pointed to the experience in Australia, where comms have revolutionised people’s attitude to savings, with a helping hand from compulsion, and where a majority now see themselves as investors.
But some advisers were sceptical about just how receptive pension consumers are likely to be. Neil Latham, principal at Punter Southall, said: “They’ve got many other things in their lives. This is way below the radar.” This, surely, he said, is why auto-enrolment was introduced in the first place, because people aren’t interested in their pensions.
Mark Futcher, associate at Barnett Waddingham, said advisers will only reach a handful of members on their own. He said: “Government should say ’We put this in place because you couldn’t be trusted to save on your own. So you’re all going to be automatically enrolled by your employers. This is generally the contribution levels that are going to go in, and here are the questions you should be asking of your employer. Where am I invested? What scheme am I in? Who’s the scheme with?’”
But delegates doubted the Government would take such a role. Originally the DWP was to have launched a huge comms programme. But now most of the budget for it has been slashed. Consequently reluctant savers could be in for a bit of a shock, when they see sums being deducted from their pay packet. Latham said: “So the political adventure’s already in trouble then.”
Timing will be a challenge for the delivery of communications at the onset of auto-enrolment. Herbert said: “How are you going to get to people in a very, very short period of time, from the time they become eligible to the time they need to join if employers are going for immediate auto-enrolment, without a deferral period?”
Joel Adams, co-founder of Lift-Financial said: “I think timing is key. When the papers start getting hold of it and people start thinking what’s happening with my workplace pension, people are going to start to need a response to the sort of questions that are going to be coming back.
“How are you going to get to people in a very, very short period of time, from the time they become eligible to the time they need to join if employers are going for immediate auto-enrolment, without a deferral period?”
The question is at what point do we start addressing those issues, and is that a driver for wrapping it into an RDR-type discussion as well?”
Robin Hames, head of technical and marketing at Bluefin, has been talking to clients about segmenting employee communication. This can generate more sophisticated levels of communication with different types of employees, he said. Employers should send different messages to distinct worker profiles, whether it’s explaining waiting periods, opt-in/opt outs or whatever else is required. The under 22s and over 65s don’t get automatically enrolled, and so need different messages. Large, transitory immigrant workforces might fit better in Nest, and could even require translated messages. Younger people may prefer communications via test or smart phone, while contacting hauliers and reps not based in the office may be more successful using some other approach.
Paul Goodwin, head of pensions marketing at Aviva, expects auto-enrolment to present consultants with “loads of opportunity” for individual advice to board and senior management members, even about the auto-enrolment duties they owe to staff they themselves employ, like nannies.
Latham said segmentation is great in principle, but can be hard to sell in practice, as clients often have much more basic data problems.
Delegates at the round table event discussed how the comms piece will drive the use of technology. Hames said in the brave new auto-enrolment world, straight-through processes will be essential, automatically triggering SMS and e-mail communications to the right kinds of employees.
But Latham was again doubtful. The older generation may lack a smart mobile, or be unprepared to hand over their numbers. Then there are sectors like workers in noisy factories, without workplace access to e-mails and texts.
Hames said advisers then have to ask whether the client is the right one, and whether they are prepared to pay the additional cost of communicating to their workforce. on paper.
Andy Cheseldine, consultant at LCP, wondered if it would be cheaper to give all the workers in a scheme a cheap pay-as-you-go mobile phone rather than take the paper route. But Latham remained sceptical about pensions via these channels. “I’m not sure how engaged people are in the workplace with that medium. If we all had i-Pads it would be fantastic. But we don’t.” He reckons the telephone is still the medium of choice.
Goodwin said that Aviva runs a GPP helpline, which currently receives 10,000 calls a month. But he freely admitted that post auto-enrolment, the company cannot tell how the number will change and pointed out it would depend on just how engaged new members are. Asked whether this is a cost-effective, viable way to handle comms, Goodwin said it depends what you’re trying to communicate. Call centres are by nature reactive, he said. The more the company communicates, the more calls Aviva receives.
“If we all had i-Pads it would be fantastic. But we don’t”
Comms are a vital tool, but with increasingly constrained resources, they should be targeted, agreed delegates.
At the higher value end, comms will continue to form part of an employer’s reward strategy, helping build employee engagement and loyalty, by making them feel valued by the employer, as well as the reputational benefit.
Futcher said for many of his clients the brief is to communicate to members the fact that employers are offering better pensions than the bare minimum, and generate kudos for the company. Cheseldine said this message is relatively easy to send. You can tell workers how much is coming from the employer and how much you’re contributing, and fund values, on the monthly payslip, he said.
At the other end of the scale, with little budget and no interest on the part of savers, employers may want to do the minimum. Futcher questioned whether passive investors, who never actually engage with their pensions, should be induced to engage more. “If they’re not worried about it, why should everyone else be? Why not just leave them? That’s what the Government want for them to be as quiet as possible, until they come to retirement.”
Latham pointed out that the disengaged don’t give you credit for their pensions, and may well actually resent the forced contributions if the Government fails to tell them they’re making the whole thing compulsory. And the more employers try and engage with this community, the greater the cost, which takes away from the sum available for the truly committed, who do actually appreciate the company’s generosity.
The conclusion therefore appears to be that in future comms, where there is a budget for them, will play more of a nurturing, educating, dare we say it, nudging role with workforces.