R&M Solutions: Can the pensions crisis be solved with the Union Jack and national anthem?
A perennial challenge with DC pensions is low engagement. People in the UK simply don’t prioritise pensions. The reasons for these are varied, but getting members more engaged with their pension scheme has been, and remains, the main stumbling block.
With 90%+ of scheme members in default options, and low employee contribution rates generally (c. 1% across all schemes in 2016*, indicating a high incidence of members contributing at the minimum auto-enrolment rate) there is a strong argument to say we are not winning the battle for engagement.
Undoubtedly if we are going to reach more people we need to change something. Perhaps Australia can teach the UK some lessons in this regard.
The Australian approach to pensions is very different to the UK, and is very much focused on taking advantage of what is on offer.
The home page of the Australian Super, the largest superannuation scheme in Australia, has the tagline “It’s Australian. It’s super. And it’s yours.”
It tugs on the heartstrings, playing to the fact that people are generally proud of their nationality. Just the name Super has a positive double meaning, but the key takeaway is that it is “yours”. Not the government’s, not your employer’s, but yours, which again seeks to drive people to take ownership and be proud of their pension.
In a similar way, the New Zealand KiwiSaver incorporates the kiwi bird into its logo, as well as a tagline in the Maori language (“Poua he Oranga” – or “safe life” according to Google translate).
Simplistic it may be, but it all helps to build engagement. Does any of it actually work? Although hard to drill down for exact statistics on this, the anecdotal feedback is that Australians are far more engaged with their pensions, even comparing benefit statements at barbeques.
So what can the UK borrow from the Oz model? It might not be a bad idea to start by thinking about this from a nationalistic angle ourselves. Rather than something to worry about, we need to make everyone want to take advantage of their national savings vehicle to ensure they have a good retirement outcome.
Currently, our approach simply states workers will be “automatically enrolled into a workplace pension scheme” on the official website. But we could do something far more positive? “You’ve earned it, so make sure there’s enough of it for you to enjoy it” is cheesy, but at least it’s a start. Or how about “Union Jack-pot”?
The takeaway here is about humanising pensions, and that’s what the multi-trillion pound industry has failed to achieve despite untold investment over several decades.
It may sound simplistic, but with bit of flair, a sprinkling of jingoism and a Union Jack, maybe the UK can start to tackle the pensions crisis in a far more effective way.
As a final thought, maybe the first step should be to stop using the word pension at all. It has lost all meaning for many, possibly due to various pension scandals and discontent from closing DB schemes. It also lacks the pizzazz of the Ozzie Super or KiwiSaver in New Zealand – and interestingly, the word doesn’t feature in either of their brands.
*Source: Office of National Statistics, “Occupational Pension Schemes Survey: UK, 2016”. Link.