Our own research carried out earlier this year found that 66% of respondents had no idea if they were saving enough for a comfortable retirement. And research from the CBI and Aegon found that employees are poorly engaged with pensions, with two in five businesses saying their staff are not engaged, and just 12% saying they are happy with current levels of employee engagement around workplace pension schemes.
One of the key issues for HR is communications and how they segment people. Many communicate by segmenting staff by age: putting a group together such as Millennials and assuming they all have the same concerns and are in similar situations. There are major pitfalls with this approach.
For instance, sending the same pension communication to all employees across the organisation in their 20s will get varying interest depending on individual circumstances and attitudes.
So, what’s the solution?
For most people, money – including pensions – is an emotional issue. People rarely make financial decisions based on logic alone. Their decision is usually motivated by psychological and personal factors; indeed 69% of our survey respondents said they went ‘against the grain’ and did their own thing.
This means the more deeply employers can tap into these, the more effective and engaging their pension communications is likely to be.
This can be done through smart segmentation. Below are four segments into which companies can smartly divide their employees:
- Segment according to financial beliefs and emotions
- Segment by behaviour
- Segment by demographics
- Segment according to milestones within your company
This is the holy grail of segmentation. It’s about figuring out the different attitudes that employees take towards their finances – also known as their 'money personality' – and tailoring messages accordingly.
Some employees will worry for the future and believe strongly in saving, while others will live a 'you only live once' lifestyle, spending freely. Some will hate taking risk and crave financial security. Others will revel in risk. Getting to the heart of what motivates employees financially will help create more effective communications.
Look at what employees do when it comes to savings and pensions. Employers will need to consider different approaches when talking to someone putting away 1% of their salary each month compared to someone putting away 15%, or to those who started saving for retirement in their 20s compared to someone who started in their 50s.
Also consider how different groups respond to communications. For those who seem receptive, try sending more frequent or detailed messages than to those who never open pension emails or attend information sessions.
Segment employees according to external characteristics such as gender, salary, home ownership or dependants. Age has its place in this group too. Not only can each of these factors influence an employee’s attitude to their pension; they are relatively easy to identify from internal HR data.
Be mindful though that the commonalities these groups share are relatively superficial. Just as two 28-year-olds may have very different attitudes to pensions, so might two women, two homeowners, and two sets of parents.
There are natural points in an employee’s journey when they will want to hear about their pension. New joiners need to find out what benefits are available and how to take advantage of them. Leavers and retirees need to understand what happens to their company pension once they have moved on. In our survey, 83% of respondents said they thought employers should communicate to them about their pension during important work stages such as salary changes.
Employers can take advantage of their openness at these junctures to communicate relevant information.
How do you know what your employees believe in?
Segmenting employees according to their financial attitudes, values and behaviour, can be the most effective. This can be done in a number of ways:
- Ask directly with a survey. Employees who rate themselves as risk-averse can be sent communications about how to invest their pension funds in the most risk-averse way – or how to avoid poverty in old age by saving more.
- Watch their behaviour when it comes to their pension. Look at who is saving early – and who hasn’t started saving yet. Who is taking a high-risk approach, and who is playing it safe? This information is readily available internally and from pension providers.
- Watch their behaviour with communications campaigns. Which emails do they open more than once? Which links do they click? What resources do they download? Any basic marketing automation platform gives this information and allows companies to tag employees according to their interests, so they can target information.
These methods are used extensively by marketers who want to segment their audiences. They understand that the more relevant the marketing messages, the more likely they are to sell their products. HR directors can take the same approach.
Devising positive communication campaigns that touch employees’ hearts and minds is more likely to influence behaviour and ultimately get them more engaged in pensions and saving for the future.
Johanna Nelson is associate director of communications at Punter Southall Aspire
