Pensions industry should communicate a more positive message
I vividly remember the day when the man from the pensions industry came to our office to persuade us to sign up for our employer’s pension scheme.
We were a room full of journalists, advertising executives and office staff in our twenties and thirties. And we were all keen to hear what he had to say.
The room was practically full when he arrived. But by the time he had waded through his presentation which was peppered with terms like “bid-offer spreads,’’ “ initial accumulator units’’ and “additional voluntary contributions,’’ most people had left the room.
Pensions people like to say that pensions are “sold’’ rather than “bought.’’ That’s why they employ sales, marketing and advertising staff to persuade potential customers to part with their hard-earned cash and provide for their retirement.
The problem that day was that the salesman was communicating with people in a way that many found hard to understand and some even suspected was deliberately confusing. It was a total turn-off.
If I was one of the very few to remain in the room, it was only because I was at that time writing for the Personal Finance pages of the Sunday Business Post and it
was my job to understand the world of pensions.
More than 20 years later, much has improved. Some companies now employ the services of plain English consultants and brand tone of voice experts to help with their communications.
But while the language has improved in many cases, the message too often remains a message of fear: the industry tries to terrify people in to buying pensions by telling them how little they will have to live on if they continue to contribute at their current, modest levels.
But all the talk of pension time bombs and looming poverty may be counter-productive as it gives potential customers the feeling that they are doomed to fail even when they try their best during difficult economic times. Far better to encourage people to get started, to save as much as they can and to point out how much that private pension saving will add to their state pension in retirement.
Instead of criticising the state pension of €12,000 a year as being insufficient, the industry should highlight that the state pension is a very valuable asset equivalent to a pension pot of about €300,000 and that this provides a solid base which people can supplement with their own private pension provision.
The message should be about how much more your private pension will add to your enjoyment of your retirement: a little more cheese/wine/coffee/holidays/handbags (and that is just for the women!).
By sending out more positive messages about what the extra saving will deliver in retirement, the industry can better position itself as a friend of the potential pension customer rather than a nagging voice driving the potential customer away.