Research and analysis

Executive summary

Published 7 October 2024

This report summarises research exploring consumer engagement and ways to increase public engagement with private pensions in the UK. It brings together findings from a rapid review of publicly available literature with intelligence from 6 expert interviews across the UK, Western Europe and Israel. This provides new insight and understanding into some of the factors influencing pensions engagement. The research highlights areas for further research and could be expanded in the future by seeking a wider range of expert interviews from across the industry.

The report firstly discusses the definition of engagement in the context of member interaction with pensions. The topic of ‘engagement’ appears to be one that has relevance and interest over many different fields and lessons can be learned from across a wide range of consumer sectors. Within the literature reviewed, the term is often used without a specific definition, but is variously attributed to cognitive, emotional, and behavioural components. The cognitive component involves the ability to understand pensions and the communications received about them. Emotional engagement includes feeling connected to or ‘in control’ of your pension. And behavioural engagement includes actions such as logging into a pensions account and making decisions on products. Engagement is typically considered a positive aspect of consumer interaction. However, the literature reviewed did not explain how positive outcomes for consumers are directly caused by consumers’ engagement.

The report also discusses factors that can increase member engagement with pensions, which were the importance of communication effectiveness; information provision; and using technology. Communication effectiveness includes making information more visible, understandable, and relevant to members as well as taking a more ‘consumer-centric’ approach to communications about pensions. Information provision includes actively sending information about pensions to people, such as by emails or letters. Using technology refers to digital tools such as dashboards, interactive tools on apps, and generally improved online access to pensions information. This needs to be caveated with the understanding that the effectiveness of technological tools depends on the level of members’ digital literacy.

Several theories from behavioural economics were also noted as potentially applicable to pensions. These included the idea that behavioural change should be manageable and that benefits should feel proportionate to the amount of effort being put in.

The report also makes suggestions for ways to increase pensions engagement. One suggestion is to create awareness through different communication channels, both online and offline, and involve pension providers and employers in the communication strategy. Another suggestion is to focus on the information members want, and to present it in a simple and relatable manner. This could include using visual information, digital technologies, and personalized tools to enhance member understanding and engagement. A final suggestion is to build trust in pensions and financial providers. This is a long-term challenge that requires honest and transparent behaviour from institutions.

The report also discusses the roles and responsibilities of different stakeholders in supporting and fostering member engagement with pensions. Firstly, members have a responsibility to take on board information about their pensions and be invested in planning for their future. Secondly, employers can play a valuable role as an information channel and can provide workplace interventions to engage employees with their pensions. Thirdly, community groups and associated agencies may have a role to play. They can reach or target specific sections of the community, demographic groups, or harder-to-reach audiences.  Fourthly, pension providers themselves have responsibilities such as providing accessible information, developing online tools and apps, and offering product formats that aid comparison. Finally, the government, particularly the Department for Work and Pensions (DWP), has the opportunity to take on a coordinating role by establishing community networks and working with pension providers. By working alongside these stakeholders, the department could improve comparability between products, and help build and foster a greater sense of trust amongst members.

The review identified a range of possible engagement points that DWP could further develop:

• The lessons that can be learned are highly varied. They range from very specific, and manageable, actions around language (for example, using £ values over percentages), to fundamental challenges (for example, encouraging easier comparability between products). This implies that a structured plan for developing engagement is needed to assign priority over the many possible actions.
• The review also suggests actions to develop a greater sense of pensions engagement and improve member literacy in this area. We know research has already been conducted (for example, by individual pension providers of their own customers) to look at different member segments. An understanding, or even a consolidated standard model of member segments would be very powerful, allowing government and providers to better develop products and communication. This may be especially important for segments featuring more disadvantaged members, who may not attract high levels of commercial attention from providers.
• Member engagement with seldom heard audiences could be supported by developing a network of community and partner agencies. These organisations could support conversations and share information with these groups.