Remember that 90’s romcom where Mel Gibson could get inside the heads of women and find out what they were thinking? Their every thought, wants, and desires? Just imagine if pension administrators could do the same thing, and suddenly understand what scheme members really wanted! If we could only hear their thoughts and wishes, we could tailor our services to provide the solutions they crave...
Or, we could just ask them.
Seeing as it’s unlikely that we’ll get hit by a bolt of lightning any time soon, let’s stick to more traditional practices, starting with what we know already.
In this age of high technology, mobile internet, and e-commerce, customers are used to instant gratification. Getting what they want, when they want it, delivered direct to the palms of their hands.
And if the next generation of pension contributors expect real-time communications on their smartphones; why are we still sending out antiquated, offline, written communications? That might have worked on generations past, but customers of today often struggle to provide a physical address. And they aren’t very good at opening letters.
Changing our priorities
Despite the fact that the tools are outdated and communications unappealing, most pension administrators are focusing on the wrong key performance indicators when it comes to evaluating the customer experience. They’re still obsessed with citing time as an indicator of good service. How long it takes to produce quotations, how many seconds members wait for their calls to be answered, and so on.
These are undisputedly important factors. But, answering a customer call quickly and solving a problem on a service that they’re forced into having for lack of anything better is hardly grounds for an outstanding customer experience.
With 90 percent of companies competing on customer experience in 2016 alone, the tendency is undeniably clear. Pension administration providers will need a few more tricks up their sleeves if they want to improve their CX.
Getting up to date on technology
Pension scheme membership for those aged 22 to 29 has boomed following the introduction of auto-enrolment. Since 2012 pension scheme membership for millennials and Gen Z has increased by over 36 percent and this group now make up almost half of the population.
They’re digital natives who were practically born with an iPhone in their hands. And they spend a lot of time staring at screens. Communications regulator Ofcom reported that UK adults spend on average eight hours and 41 minutes a day on media devices; which is 20 minutes more than they sleep! If pension administration providers really want to reach their scheme members, they need to get into bed with technology - STAT. Throw out their outdated systems and start reaching their user base where they are.
Widening the offer
Today’s tech-savvy customers are used to being surrounded by choice. They’ve come to expect it in abundance. With dozens of alternatives at their fingertips, from financial advice to clothing options; why are still so few pension schemes offering any type of online access? Isn’t it about time that pension administrators and trustees started widening the offer?
Instead of just a couple of outdated packages that no longer suit the changing demographics, we need to offer solutions that fit in better with our scheme members’ lifestyles and get creative at motivating millennials to invest in their financial futures.
Millennials are known for their tendency towards social responsibility. In fact, according to Morgan Stanley, this group is twice as likely to invest in funds that target environmental or social causes. So, beyond looking at schemes that allow flexible contributions and portability, we should offer plans that allow customers to allocate a percentage of their retirement savings to social finance investments.
Trying a little rebranding
Let’s be honest. Trying to appeal to a segment wallowing in student debt, finishing university later and taking gap years isn’t easy. The thought of saving for their pension is alien to much of this demographic. After all, how can you put money away when you’re eating pot noodles and wearing extra jumpers to save on your heating bill?
According to former pensions minister Steve Webb, pensions should be rebranded. The very word “pension” evokes images of grey-haired old ladies wearing purple coats and drawing their monthly pay cheques. And that really isn't cool.
“Because pensions sounds like pensioners, young people don’t think they will get old… However, they face big challenges more than ever to save adequately for retirement,” says Webb. He suggests using the term “life choices pot” or “freedom pot”; something that allows you to have a conversation without mentioning the dreaded P-word.
Making the message more attractive
According to a report by PwC, the media does little to improve the image of pensions. When scheme members hear about their pensions, it’s usually surrounded by something negative. Whether it’s wide-scale cutbacks, lack of funding, or an unfair risk allocation between young and old, pensions have a fairly bad rap.
In contrast, companies like Google, Facebook, and Instagram make use of fun and engaging messaging that’s creative and stimulates the desired behaviour. Okay, so no one is comparing taking out a pension scheme to uploading a selfie, but the point is still valid. Pension communications need to be more positive, attractive, personalised and engaging.
Despite the fact that nearly 40 percent of businesses believe that millennials want digital pension tools, only just over half of this number have started to adopt them. Pension administrators know they need to make a change, but they’re dragging their heels. With demographic and social changes, new technologies, and outdated systems, the industry is going to have to start modernising pensions for millennials, using engaging platforms that complement their lifestyles; direct to their mobile devices.
Karla Bradstock, Client Relationship Manager