31 January 2018
I was surprised recently when, for the first time since I started working in the industry, one of my mates started asking me about his pension while we were in the pub. I’m usually met with glazed eyes when I broach the subject of pensions with friends, so a proactive question from a fellow millennial was a first!
There’s a common misconception that millennials don’t care about saving for the future, which in lots of cases simply isn’t true. The research is starting to stack up to show they do care, and do save as shown by PLSA’s research.
But what quickly became clear while I was chatting with my friend was the lack of understanding over how savings products (including pensions) really work, and that conflicting financial obligations is a common conundrum.
So perhaps the best way to help this demographic is to make savings goals personal, simple and achievable.
Here are a few simple – and potentially powerful – ideas to engage those born between the early 1980’s to the mid-1990’s when it comes to their pensions and retirement savings.
Help make short, medium and long term savings meaningful
I’ve read lots of articles about millennials saying it’s too hard to save for retirement, and they are far more concerned about saving for their next holiday. Rather than seeing this as a negative, see it as an opportunity to begin engaging with the employees of tomorrow. They are saving, enjoying life and experiencing new places – so let’s make it easier for them to save for multiple goals in one place. Retirement may be too far off to visualise, but saving for a home, holiday or wedding may not be. Let’s help them get into the savings habit now.
Auto-enrolment is only part of the solution
Auto-enrolment has been a big success in getting millions saving who previously weren’t doing so, but with contribution rises on the horizon, many are expecting opt-out rates to increase. Why? The initially low opt-out rates are most likely due to the minimal impact on take home pay. When the contribution increases to 8%, it could be seen as taking away valuable spending money. Simple, personalised communications are essential to help millennials understand the benefits of long-term saving.
Help millennials access information they need
To get people to really engage with their future finances, we need to make access to pensions as easy as accessing your current account through your banking app. Other industries have cracked this, and our market is slowly catching up.
Technology that allows employees to link both personal and workplace savings is becoming more popular and easy to access, and the recent introduction of ‘Open Banking’ in the UK promises to accelerate the range of innovative options available. Letting people see their finances in the round will help them better manage their short, medium and long term savings.