Retirees to get clearer communications on pension choices
The new communications have been devised after trials with the Behavioural Insights Team on behalf of the Pension Wise service and in conjunction with LV=, Standard Life and Royal London. It used actual customers approaching retirement and ran a series of tests to see what, if anything, improved engagement.
For example, in one test, the standard ‘wakeup’ pack from a pension provider was replaced with one side of A4 that included all the essential information that a customer needs to access open market options, and a clear call to action around next steps – a ‘Pension Passport’. This increased visitors to the Pension Wise website by around 10%.
The survey was prompted by a Financial Conduct Authority (FCA) report in 2014. It surveyed pensioners at retirement and found that one of the top reasons for not shopping around for an annuity was that they did not feel capable of understanding the vast amount of information available in order to make an informed decision. Following the publication of this research, it is now expected the FCA and Department for Work and Pensions (DWP) will now push the pensions industry towards simpler communications as soon as possible.
Tom McPhail, head of policy at Hargreaves Lansdown, said: “This evidence confirms what a lot of businesses probably knew already; customers are more likely to act on simple, clear concise information, whilst lengthy complicated documents tend to cause customers to disengage. Given this evidence we hope all companies will now adopt a simple, Pension Passport type approach to help their customers make good decisions with their retirement savings. Where necessary, the FCA and the DWP should intervene to ensure all pension providers adopt this approach.
“Most people know how much is in their bank current account and how much their property might be worth; hardly anyone has even a vague idea how much their pensions are worth until they are almost ready to retire. This has to change. All investors who are approaching the age at which they might draw on their pension savings should take the time to explore their options.”