The phrase "member engagement" echoes as a core principle for pension schemes and providers, with its importance highlighted frequently. Yet what do we mean by member engagement, and does it really matter? After all, pension schemes can continue to operate despite a distinct lack of action by members.
Member engagement goes beyond mere participation, it ensures members are actively involved in using the information available to them to make informed decisions about their financial future.
Alarmingly, as many as 1 in 20 people could be missing out on pensions worth on average, £9,500 each. It's about understanding pension benefits, making informed decisions, and crafting a robust plan for retirement.
The alternative scenario can lead to severe implications, leading to members potentially finding themselves ill-prepared for retirement. Meanwhile, pension schemes grapple with operational inefficiencies and regulatory hurdles.
Historically, engaging members has been an uphill battle. Low awareness and ineffective communication channels have contributed to a persistent challenge. The communications that do reach members can be challenging to decipher, creating an information gap.
For administrators, alleviating the long-standing engagement challenge requires the right tools.
Digital solutions are breathing new life into pension communications. From user-friendly portals to innovative video annual benefit statements, empowering members to access and engage with vital pension information anytime, anywhere.
A growing number of pension schemes are embracing digital platforms, such as Heywood Engage, to provide members with easy access to their pension information. The statistics are telling. North East Scotland Pension Fund for example experienced a 15% year-on-year increase in participation following the launch of Heywood Engage, a number expected to grow further as awareness rises.
This shift is more than a matter of convenience; it promises personalisation, targeted communication, and education—key components of robust member engagement.
Methods of engagement are changing too. Traditionally a letter would be sent to members for them to respond to. Preferences have changed though. The postal service can be unreliable, not to mention increasingly costly, and if you’re sending a letter to a member who no longer lives at the address you have on file, it’s unlikely it’ll ever reach them. That’s why we’re seeing more and more schemes integrate email into member communication strategies.
The stats back this up too. Digital ranked highest for members in a Professional Pensions survey when it comes to communicating pension information – with 37% of members choosing email as their number one communication preference, compared with 31% preferring postal information. This gap is only expected to widen over time too.
What elevates member engagement beyond a buzzword is its role in the broader scheme of pension management. For pension providers poised to embrace this digital evolution, the journey begins with a pivotal cornerstone: accurate member data.
Without good data, schemes waste time and money, increase risks of errors and often provide members with a below par service. You can forget personalisation, and being able to effectively communicate with members goes out the window too. Regulatory compliance, too, becomes an uphill battle.
Pensions dashboards will also be a catalyst for engaging members with pensions, but the programme will fall at the first hurdle if accurate member data is absent.
Accurate data forms the foundation upon which member engagement rests. With precise data, schemes can tailor communications, providing members with the right information at the right time, delivered through channels that suit their preferences.
So, is member engagement genuinely that important? The answer is simple, yes —it's crucial. It's not just about keeping up the latest trend; it's about fostering a strong connection that benefits both pension administrators and members. It's about empowering members to actively engage in securing their financial futures.
The value of engagement extends to members gaining control and convenience like never before. Through the newest iteration of digital platforms, members are placed front and centre, enabling them to actively contribute to maintaining the accuracy of their data, addressing a persistent challenge: data decay.
By acknowledging the hurdles and proactively addressing them, pension schemes embark on a transformative journey toward improved member engagement. The digital tools at our disposal present unprecedented opportunities to reconnect with members and guide them toward financial security in retirement.