Shout smarter or shout louder please Pensions

Energy bills soared last week. Food prices are going up a fair whack too. So are house prices again.

Someone once described inflation to me as being like salt. You need a bit of it in your diet, but too much and it becomes dangerous. Right now, people are being forced to swallow tablespoons of the stuff.

Given this, it was a curious time to see the two bodies charged with promoting pension saving launch a new campaign last week. The PLSA (Pensions and Lifetime Savings Association) and ABI (Association of British Insurers) launched an initiative “to boost people’s understanding and engagement with their pensions”.

Both parties went on to say what’s been said before, that “only 20% of people are confident they’re saving enough for retirement, and without action to save more, millions risk not having enough money to meet their needs”.

Maybe it wasn’t such a curious time after all. When the purse strings tighten, long-term saving is the first thing to get hit. Better to get out in front of soaring inflation threatening pension saving then (or at least get out at the same time as it).

Whether you think the timing is curious or clever, there are serious questions to be raised about the ambition and likely impact of this campaign. Consider the following:

  1. The combined might of the two biggest pensions trade associations, plus 11 “sponsors” and 4 “supporters” including industry heavyweights Aviva and Fidelity, committed just £1 million to the campaign. There are more than 30 million working adults in the UK. Even if the campaign ignores the 20% of confident savers, that means a grand total of 4 pence (four!) per worker.
  2. There is zero mention, anywhere, of the current cost of living challenge. Nothing in the press release, nothing in the quotes from PLSA and ABI managers, or the Pensions Minister. A week after energy bills doubled soared feels utterly tone deaf. Only 20% may be confident they’re saving enough, but a far greater proportion know they should. They just struggle to do it when paying more to keep the heating on and the fridge stocked.
  3. The campaign isn’t new or different. I’ve advised companies in the pensions space for 15 years. Calls to raise awareness and encourage more saving haven’t changed. The arguments are the same, and so are the calls to action. If you hit your head against the same brick wall ten times, why line for up another run….

I don’t advise the ABI or the PLSA. I can’t claim to know how they put together this campaign, or the challenges they faced corralling so many organisations to back it. But I can raise issues with what they’ve ended up with. It’s simply not going to move the needle.

Here’s what I would have done instead:

  1. Recognise the current situation, don’t ignore it. Maybe you can’t save right now. Maybe you need to reduce what you save. Maybe you want advice on what to do while the pension pot takes a back seat in 2022. A more effective campaign would help people understand what to do when they can save again. It might offer a different perspective on household budgeting. It might educate people that it’s ok to miss a year or two of contributions as long as you make them up later on. And it would absolutely encourage people to do whatever it takes to keep their employer’s contribution flowing in.
  2. Diversify the supporter base. If the traditional pensions industry isn’t willing to stump up significant funding, then look to others who might. Look at organisations with social missions. Find companies with a focus on specific demographics you want to target. Or entice companies keen to create a point of difference in their ESG strategy. Don’t just accept whatever level of support you can generate from your traditional partners. Look beyond them.
  3. Campaign to change something that really makes a difference. Pension saving has rocketed thanks to auto-enrolment. The idea of people having to opt-out rather than opt-in has transformed the landscape. But the system isn’t perfect. The mandatory contribution rates are too low to build-up a sufficient pot for retirement. This is especially true of employers, who only have to pay 3% of qualifying earnings. A campaign that aimed to change the employer contribution by law, or encouraged employers to increase levels voluntarily would have far more impact on pensions pots.

Almost everyone I’ve met in the pensions industry has one trait in common. They’re passionate about helping people save enough to live a long, contented retirement. They also know it’s a constant struggle encouraging saving over spending.

Fair play to the PLSA and ABI for recognising they need to do something, but campaigns like this aren’t the answer.