How data is helping to empower employees towards a better future
Donna Walsh | August 14, 2020
Time to read: 4 minutes
Employees have very different needs throughout each stage of their life and as Donna Walsh, Head of Proposition Deployment, explains, timely communication harnessing the power of data can support these needs to help employees fully engage with their pensions.
The introduction of auto-enrolment and pension freedoms were major changes in pension provision.
I’ve always been struck, however, by the stark difference in approach between the two; auto-enrolment largely predicated on inertia, while pension freedoms require individuals to be suitably proactive at the point of retirement.
Despite these contrasts, the ability for employers to better engage employees to make more informed decisions about their workplace pensions remains the common goal. And it continues to be vital that employees are able to learn and engage with their workplace pension in the most effective way possible.
A well-considered employee engagement programme therefore should always take account of their different needs and recognise that a one-size-fits-all approach will not be fully effective.
Instead, communication that’s both timely and relevant, and based on insights of employee needs at each of their life stages, can make much more of an impact.
Harnessing the power of data
Harnessing employee data in a strategic way, such as age and size of pot, coupled with actions taken by employees has given us the insights to engage more effectively with employees through our retirement journeys.
With the help of data, sending employees dynamic communications at the right time, in the right way, with the right message is more likely to be effective in engaging employees with their pension.
One example is our automated milestone birthday communications where emails are sent out in advance of an employee’s 50th birthday and 55th birthday etc, with tailored messages to help them prepare for retirement. Our statistics show that the average open rate for these communications is 88%, compared with an average open rate for financial services of 21%.
Data is also helping us understand vulnerable employees. As part of an employee engagement programme, it’s important to recognise and understand any vulnerability an employee may have, such as a health issue, literacy levels or their ability to use digital channels. If we have permission to use that insight, we can design the right communication solutions for them.
Offering employees choice
As part of a targeted communication programme, it’s also important to give employees choice about how to engage with their pension, whether that’s through digital, letters or through contacting our telephony team.
Since our mobile app was launched in 2015, there’s been a significant increase in use, with an average one million logins per month and overall session logins are expected to overtake our online dashboard over the next few months. But it’s insights from data that are helping us make enhancements to our app and dashboard to support employee needs, and we’ll continue to develop these channels.
Data and our needs-based segmentation model
Most recently, the power of data has also allowed us to develop a new, needs-based employee segmentation model to engage employees in the most effective way possible with tailored, dynamic content.
The model is based on extensive research, including qualitative and quantitative research, and offers different segments based on employees’ financial life stages and wealth. Each profile includes:
- Insights on employee engagement levels, online and via the app; and from regular employee research surveys
- Financial goals, such as repaying a student loan, retiring early or repaying a mortgage
- Functional needs, such as needing to factor in inheritance planning or understanding retirement options
- Emotional needs, such as needing to feel savings are secure
By supporting employees in each segment to achieve their respective aims through timely communication, a better savings habit can be encouraged as well as increasing confidence.
For example, one of the model segments is for younger employees. Communication has been tailored to support them in understanding the basics of pensions and investments, but also includes wider financial wellbeing content such as budgeting and general tips on saving.
Our milestone birthdays communications have also been extended out; encouraging new joiners to engage with their pension savings, reinforcing the basics around pensions and investments, and encouraging them to use our online pension calculators to review their progress and think about their ‘future self’.
Using data to support employers
Data is also powering our Client Analytics tool which is being rolled out this year to support employers with their workplace schemes. The tool will provide employers with valuable insight on how their employees are interacting with their pensions.
Client Analytics will deliver enhanced analytical capability, allowing employers to apply an objective-based approach to their workplace scheme analysis. The aim of the tool is to draw out actionable insight on employee behaviours across each of the different segments and, most importantly, enable employers to make informed decisions about employee communication plans, with a view to improving outcomes.
Continuing to adapt to change
The introduction of auto-enrolment and pension freedoms have had a huge impact on our industry and as a provider, it’s important we never stand still.
We worked with Cowry Consulting, a behavioural science consultancy, to utilise ‘nudge’ theory to help develop our digital retirement journey communications to continue to improve employee engagement for improved outcomes.
And in a post-pandemic world, with more people engaging digitally to stay connected, our industry will have to continue to adapt to fully understand and engage employees with their retirement savings. It has never been more important to offer timely and relevant communications.
For our part, smart technology and data will continue to provide new opportunities to both engage employees and support employers now and in the future.
We will be sharing more information about our Client Analytics tool soon.
The views expressed in this blog should not be regarded as financial advice.
It’s important to remember that a pension is an investment. Its value can go down as well as up and it could even be worth less than was paid in. Tax rules and legislation can change. Tax treatment depends on individual circumstances.