Pension schemes need to use the right kind of language to effectively persuade members to contribute enough money to build up an adequate retirement income, according to new research.

Entitled “Beyond the defaults”, the research report from Invesco, Nest Insight and language strategy specialists maslansky + partners, showed how simple changes in language and message framing by providers can help UK workers become more active at key points in their savings journey.

The report said there were signs that the uncertainty of the COVID-19 pandemic had made the topic more salient.

The research found that 40% of those surveyed were unaware they can choose how much to pay into their pension scheme, while one-third believe that auto-enrolment minimum contributions are a recommended level of savings. Two-thirds of those surveyed pay only the default amount.

The research was carried out via interviews with pension experts, qualitative research with both individuals and groups, and an online survey of 1,500 participants in the UK during August and September 2020.

The Four Ps’

In analysing the right and wrong ways to talk about pension contributions, the report outlines what it calls the “Four Ps” approach, recommending that providers’ communications should be:

  • Positive: “You can” is more likely to engage than “You should”;
  • Plausible: Credible presentations of the benefits of saving are more likely to connect than dream retirement scenarios;
  • Plain-spoken: An estimated income figure is more helpful than a pot size, as it enables people to focus on the lifestyle they will be able to afford, relative to their current income;
  • Personal: Messages should be framed from the individual’s point of view – “You” is more engaging than “us” or “the company”.

The research also identified some foundational messages to help close the gap in people’s understanding.

These include “You can contribute more to your pension”, and “Contributions you make when you are younger work harder for you”.

Jo Phillips, director of research and innovation at Nest Insight, said: “These new findings suggest that some simple changes to the words and framing we use to communicate about workplace pensions can make a real difference by brushing aside much of the confusion that’s stopping people saving the amount that’s right for them. When combined with behavioural interventions, they could prove powerful levers for change.”

The survey report is available here. It comes after NEST Insight earlier this month published research examining whether communications about the positive impact of pension investments could make savers more likely to engage with retirement saving.

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