Adrian Boulding: Personalising pensions to engage ‘Generation K’

Pension communications needs to step beyond dry statutory annual statements into the arena of personalised, highly relevant messaging – and could benefit from taking a lead from the likes of Monzo and Starbucks, writes Adrian Boulding

© Ian Macaulay

Just last month, I was lucky enough to attend the Pensions and Lifetime Savings Association’s Annual Conference in which internationally-renowned economist, TED Talk giver and five-time author Noreena Hertz spoke. She talked of the need for the workplace pensions world to begin to think more about not only digitising but also personalising auto-enrolment pensions communications to capture the hearts and minds of Generation K.

Question one then may well be – who is ‘Generation K’? We used to call them Generation Z. They are the digital natives or ‘connected’ generation that immediately follows millennials. So, they are now aged 16 to 23 years old. Noreena conducted an 18-month study of this group during 2014 and 2015 before renaming them Gen K after the heroine of the dystopian nightmare that was the Hunger Games films, Katniss Everdeen.

Noreena observed that this group – partially because they are so completely influenced by what they view and read on their smartphones – has a uniquely paranoid and potentially negative outlook on life. Like Katniss, they feel the world they inhabit is one of perpetual struggle – dystopian, unequal and harsh. They grew up in the shadow of a post-9/11 world – the seismic event that arguably acted as the trigger point for a whole new level of sabre-rattling, geo-political instability and uncertainty.

Their views may have been crystallised by real life video nasties put out by some of the terrorist groups. These too they might well have viewed on their smartphones. They also have particularly negative views of personal debt – imagining they will find it difficult to realise the relative economic stability and prosperity of their parents.

They also crave personal connection – physical or virtual – and authenticity. They tend to distrust governments and big corporations in equal measure. In short, they are tough to please and have more than average mental health issues, Noreena’s study found.

There does, however, appear to be a way to reach this seemingly sceptical group by personalising content or offers and delivering these all via their social-messaging platforms of choice, of course. Apparently many Gen K-ers flock to Starbucks, not because they are coffee bean connoisseurs at all but because this chain works particularly hard to find out what types of drinks Gen K-ers like.

It then sends them offers for ‘secret menu’ items that appeal to them – perhaps based on previous purchases and online questionnaire responses, which Gen K-ers are prepared to complete. This is a generation that is prepared to sacrifice some of its personal data if, in return, they get to feel special – gaining access to personalised insights, content, goods or services.

Starbucks gets this. In short, it makes Gen K-ers feel special – tailoring offers to meet the taste of a relatively small group of customers. They are offering them drinks you and I don’t know exist and certainly are not on display on the shop’s main price list.

By treating them this way, Starbucks is able to grow a fan-base of teenagers just as they are heading off to college or university where they are likely to spend a whole lot more time sipping syrupy Starbucks-made concoctions. There may well be a spin-off benefit for dentists here too!

This leads me back to auto-enrolment pensions engagement. Whether or not they yet know it, Gen K is also the ‘Auto-enrolment workplace pensions generation’. If they are fully employed – rather than working for themselves – once they have left school or college, nearly everyone in this group will be offered an auto-enrolment workplace pension and most will take up this offer.

And next year’s Pensions Bill may well lower the starting age for auto-enrolment to 18 bringing even more Gen K-ers into it. But the trick, Noreena would argue, is to personalise the communications around their retirement savings as far as possible to keep them on board once they are there.

People only reconsider their level of pensions saving if something changes in their lives that turns a silent ‘need’ into something they really ‘want’ to do. Engagement happens when those ‘wants’ align with the services you are offering.

Blind, un-personalised nudges via email into our overloaded inboxes are not enough. Paper-based annual statements are worse still. We need to promote interaction so that when a ‘life event’ happens – like starting a new job, getting married, starting a family or just getting a small pay rise – providers’ interfaces need to pop up and present digital routes to check-in, re-engage and reconsider where their savings levels are and where they should ideally be headed.

Pensions will be just one of their savings buckets – and helping them balance all those buckets demands significant investment in user experience to ensure all the data and insights are presented in a personal, visual, light-hearted, goal-oriented and fun way, perhaps enabling them to easily check their pensions policy balance and even putting their numbers alongside the average from a basket of similarly-aged, yet anonymous, Gen K-ers to see how they are doing relative to their peers.

And if providers are struggling to get this interactivity and engagement going, it might be worth having a look at what the new entrant banks such as Monzo are up to. These guys understand the best way to gain engagement is to provide real-time insights based on actual transactional data.

Once you are into the spending charts they offer, the provider can begin pushing bite-size insights on spending patterns, which might well help you budget better and save more going forward. That’s positive, loyalty-inducing stuff that promotes better cash management – the right platform for saving.

Digitising and ‘socialising’ the process of communicating to Gen K-ers – and Millennials, for that matter – is likely to stimulate deeper engagement, turning them on to long-term saving. The industry already recognises that sending the current lengthy annual pension statements by post or email is not working. Most recognise these are rarely opened, never mind read, understood or acted upon. Reducing them to the proposed two page ‘simpler annual statement’ will, if nothing else, save a few trees.

Inspire, engage and stimulate

There is no doubt, however, that pension communication now needs to step beyond dry statutory annual statements, into the arena of personalised, highly relevant messaging if they are to capture, inspire, engage and stimulate the next generation of savers as they enter the workforce and step onto their own personal pension savings journeys.

As pension transactions are relatively infrequent, providers may not have the data points themselves to create convincing personalised communications. Don’t worry though – that data is out there. Someone else has it. All you need to do is to find a perfectly legal and GDPR-compliant way to hook into it. Then you too can lift your communications into the hallowed league of those that are keenly-opened, and even responded to, by your recipients.

Adrian Boulding is director of retirement strategy at Dunstan Thomas