The Barrier of Words

As passionate pensions people we want to communicate well. We want people to understand their pension and appreciate its value. But we are often stopped from communicating well by our own blind spots. In fact our words can be a barrier to getting the message across.

The Technical Barrier

Too often we assume we are being clear with our pension communications when it is nothing but gobbledygook to the recipient. We are so wrapped up in the industry we work in, we are not aware of the pension jargon we are using. Glossaries help, but better to write plainly and assume the reader knows nothing about the subject. If you talk about ‘hedging’ your investments, people are likely to be thinking of a green bush in the garden. If you speak of commutation, people will think you are talking about travelling to work…. You get the picture!

The Cultural Barrier

This is a more subtle communication issue. Not all companies are the same. Many may be UK companies and have a certain style of communicating. Others may be US companies- generally the business language is sharper and more to the point.

I work part time for a community based charity. Here the language is very different to anything I have experienced in the commercial world. You can’t just dive in to the issue you want to email on, for example. There has to be a bit of a ‘how are you’ and a conversation would typically end with ‘blessings’ rather than ‘cheers’ or ‘yours sincerely.’

So when you’re speaking about pensions – typically a ‘foreign language’ to any organisation, it’s important to first asses the culture of the company you are working with.

The Functional Barrier

As an occasional consultant for Pension Geeks, it’s interesting pitching business. No matter what the potential client may say, you are being assessed against the incumbent communications company. And, sometimes without the client being aware of it, they are expecting you to be the same, and possibly to charge the same. (As we’re smaller with fewer overheads, the fees are usually a good conversation to have).

That same functional barrier can work in presenting pensions to a non-specialist audience. They have an expectation that they won’t understand it, sadly based on earlier pension events or (often inaccurate) articles they have read in the press.

Words can be a barrier. And there’s the challenge!

Majoring on the Minors

My good friend Henry Tapper makes an interesting point in one of his recent blogs (where does he get the energy to write so much?!) He points out that we keep going on about investment freedom of choice when most people just need a good default choice.

That’s backed up by what we find on the Pensions Awareness Day bus. So many people come on board with pension questions. And so many more with a simple statement: ‘Tell me what to do.’

We are catering too often for the financial expert, and not enough for the man or woman on the street. It may feel uncomfortable to ‘tell’ people what to do but that’s what they want.

If we could just put as much energy into developing effective default options as we do into developing the next big investment idea that is only of interest to the minority, we really would be getting somewhere.

Good-bye Ros

I wasn’t a fan of the Ros Altmann appointment as Pension Minister and am not unhappy to see her go. She has been a good champion of pension’s miss-selling and other inadequacies in our present system, but she has also been a champion of her own profile. A bit of self-promotion is okay so long as you get the right things done. But in her time as Pension Minister, frankly, she didn’t.

She appeared to put on hold Steve Webb’s Defined Ambition agenda but didn’t push through anything else in its place. She was caught out, seemingly, by Treasury initiatives around lifetime ISAs, and her most publicised comments during her tenure were not on the subject of pensions but her critical observations relating to her then-boss Iain Duncan-Smith.

As she continues to speak for pensions from her seat in the House of Lords, it is likely to be as a populist voice for change, but without the detailed knowledge of how to do it- something else that exposed her during her time as minister.

And I expect we will see a return to the OTT headlines in the Daily Express with Ros Altmann quoted as the expert. I suspect that many of these headlines in the past were her own creations and necessarily lessened whilst she was Pension Minister.

The more junior appointments that follow her tenure suggest a greater hold of pension policy at the Treasury as well as reflecting a perceived government view that pensions doesn’t need high profile ministers.

Benefits that Drive Value

I met a Finance Director of a medium sized business recently. In our brief conversation, he made it clear he did not value the benefits his company provided to staff and saw them simply as an additional overhead.

If I’d had longer to talk, I’d have said more than I did. This is my follow up letter. (Not actually sent as I didn’t get his details!)



Dear Finance Director

It was good to meet you the other day.

I appreciate our conversation was a brief one, but if I’d had longer to chat, this is what I would have said….

I understand business is tough and from your point of view, additional benefits on top of salary are just overheads to be dealt with. But have you considered what you could do with those benefits at little extra cost to you?

Most employees don’t value their benefits either- mostly because employers don’t communicate them too well. I’m guessing that would include you- why communicate what you don’t value as a business manager? But the benefits all have value. The pension has matching employer contributions. That’s like free pay to your staff. Even the flexible holidays have a value, and the discounted affinity benefits have little cost to you but significant value to those who use them.

I guess I’m asking you to have another look at what you offer.  With the right communication, you can turn benefits from perceived business costs to providing a competitive edge for your company. Good benefits properly explained promote your business above and beyond your competitor who does not have those benefits- or does not bother communicating them. Small communication costs can provide a significant competitive edge, driven from staff wellbeing and a value well beyond the benefits themselves.

Benefits don’t have to be overheads. They can be your business case for future profitability.

Yours sincerely

The Reason for Wrong Decisions

Well done to Darren Philp of People's Pension for the excellent presentation at this week's Pension Age Conference. He spoke on reasons people make the wrong decisions. So with some commentary of my own,  here's hoping I was listening properly:

1. Present Bias
This is simply the feeling that I can have the money now, take it out, use it, not save it.

2. Ostrich Effect
Head in the sand and the pension decisions may go away.

3. Optimism Bias
I really won't need to save that much as what I have will bring in loads of interest. Alternatively... I really won't need much in retirement...

4. Complexity Aversion Bias
Too much choice! What to do? Nothing.

5. Bandwagon Effect
What's everyone else doing? That must be right....

6. Confirmation Effect
Can someone please confirm what's best for me? Just tell me what to do!

The solution to these issues lies in clear communication at a simple level, good 'defaults' and a good deal of persistence from the employer/provider!

Belonging

There's some good thinking from LCP on the Brexit issue this week. In the end it may not be to do with economics, but more to do with 'belonging'.

Do we want to be part of Europe or not? To be on the outside may not be the best place for us in the long term, even if in the short term, the financials are not so bad as they are sometimes portrayed.

I prefer belonging to pulling up metaphorical drawbridges, but as the LCP article suggests, there's a lot of emotion and hot air in this debate. The Churchill quote is apposite:  “A fanatic is one who can’t change his mind and won’t change the subject”.

Being Bold on the Benefits of Pensions

Helen Morrisey’s clarion call in Professional Pensions to be ‘bold on the benefits of pensions’ is welcome.

So often, as pension professionals, we get caught up in the minutiae of the pension issues and forget the big message. But the big message is a simple one and needs saying as frequently as possible. And as simply as possible.

On the bus tour linked to Pensions Awareness Day, nearly 600 people came onto the bus during the week. And what did they ask? Details as to how S2P is changing? No. How to maximise their AVCs? No. What investments will give the best return? No.

Their questions were simple (see previous blog):

–      ‘What’s a state pension?’

–      ‘Do I get any pension from the Government?’

–      ‘Does my employer offer a pension?’

–      ‘Do I have to offer a pension?’ (from an employer)

–      ‘It’s all too complicated’

–      ‘There’s too much choice’

–      ‘Tell me what to do’

To quote Helen, ‘we need something simpler, cleverer and bolder’. Come on pensions communications companies- let’s be hearing from you!