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What’s the purpose behind Pension Awareness Day?
Having already celebrated National Hot Dog Day and Telegraph Pole Appreciation Day, you can be forgiven for losing track of the seemingly endless (and increasingly obscure) list of national awareness days crammed into our calendars.
But for anyone working in the area of employee benefits, there is one day that you don’t want to miss and that’s Pension Awareness Day.
This annual event is the peak of a week-long campaign aimed at highlighting the importance of saving enough for the future. It is normally held on September 15 every year, but as a mark of respect for Her Majesty Queen Elizabeth, in 2022 the campaign has been rescheduled to run from October 31 to November 4.
As well as bringing the issue of pension saving into the spotlight, the Pension Awareness campaign also encourages people to access practical advice. It has previously facilitated this via the campaign’s big blue bus, which undertook tours of major towns and cities across the UK. After a digital awakening during the pandemic, however, this year’s it will feature a series of live online shows running across the week.
Founded in 2014 by Pension Geeks, Pension Awareness has grown to become a government-supported industry-wide initiative. In 2022, it will pave the way for a major Pension Attention campaign running throughout the autumn. This is being led by a cross-industry coalition of 17 providers and schemes representing approximately 45 million savers, it is being co-ordinated by the Association of British Insurers (ABI) and the Pension and Lifetime Savings Association (PLSA), and it is supported by the Department for Work and Pensions.
A cause for concern
The involvement of such influential stakeholders underlines the scale and intent of such campaigns, and their objectives are clearly to be lauded. Their existence, however, begs a simple question: why are they needed in the first place?
The answer can be found in the slightly contradictory signs coming from the pensions market. Here, on the one hand, the UK’s workers have now benefited from automatic enrolment into workplace pensions (auto-enrolment) for almost a decade. Prior to this policy being introduced, the number of people saving into private pensions was on the decline in a situation described as a crisis. In the nine years that followed its introduction, however, participation levels have increased from 47% to 79%, and as of June 2022, more than 10 million employees have been included within a workplace pension scheme and 974,000 have been automatically re-enrolled (having previously opted out).
On the other hand, however, auto-enrolment has not been a miracle cure for all of the pension system’s ills. Its impact on participation levels has been almost universally accepted as transformational, but it has not necessarily had the same influence on engagement and contribution levels – something that experts feared would happen a decade ago.
Indeed, ongoing concerns over low contributions and increasing opt-out rates have prompted some employers to back proposals for a minimum auto-enrolment contribution of 12%, half of which would be paid by the company. The ABI has advocated for this default rate to be accompanied with an opt-up or opt-down mechanism, forcing scheme members to take action if they choose to contribute at a lower rate.
Energising employees through positive messages
As the PLSA points out, engagement among employees remains a crucial issue. The association cites research highlighting that the majority of people struggle to find information about their pension and that only a fifth (20%) are confident that they are saving enough for a comfortable retirement. Over time, the introduction of Pensions Dashboards is expected to go some way towards addressing this situation, helping energise employees to connect with retirement saving in a more meaningful way.
In the meantime, for employers trying to encourage workers to pay more attention to their pension, the current economic context underlines the need for any messages to be communicated with sensitivity. After all, the shadow of rising inflation and ongoing uncertainty over forthcoming rises in energy bills have created a difficult environment for many households across the UK. Inevitably, this has led some employees to reconsider and, perhaps, recalibrate their financial priorities, potentially compromising longer-terms saving over more immediate needs.
This situation that has led some commentators to question the timing of pensions awareness campaigns, but organisers are resolute about the importance of spreading positive messages about pension saving. Indeed, this is the very reason Pension Awareness Day was set up in the first place, with the founders stating that it was a reaction to feeling “turned-off and confused with the typical rubbish pensions communications”, regretting not saving and wanting to prevent others from feeling the same way.
Their advice is to avoid reams of jargon-heavy information that can intimidate employees and dissuade them from engaging with the concept of pensions altogether. Conversely, taking a plain-talking approach can result in employees being increasingly invested in their pensions, both emotionally and financially.
The information contained within this communication does not constitute financial advice and is provided for general information purposes only. No warranty, whether express or implied is given in relation to such information. Vintage Corporate or any of its associated representatives shall not be liable for any technical, editorial, typographical or other errors or omissions within the content of this communication.
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