As retirement communication specialists, we have a key role to play in highlighting to clients (and their people) what reality could look like, what the options are and how to weigh them up in order to enjoy a retirement that’s better than basic.
The recent mic drop from the Pensions and Lifetime Saving Association’s (PLSA) Retirement Living Standards of what a minimum, moderate and comfortable retirement looks like for many Brits is a worry, particularly when you couple that with the stark reality facing most.
Expectations versus reality
As an industry we have a role to play in helping pension scheme members understand that everyday staples might not be part of their life in retirement. Even with the full new State Pension increasing in April to £221.20 per week (from the current £203.85 per week) and, if they’re fortunate enough to have squirreled away some money in a pension pot (which amounts to £32,700 on average for a retiring 55 year old, taking life expectancy1 into account), for most it’s no more than a combined total of £1,043 a month or £12,516 a year.
The alarm bells start going off when you combine this with what the PLSA says a minimum, moderate and comfortable retirement looks like. Recent figures highlight a 38% jump in the amount needed in retirement to enjoy a moderate standard of living. And (drum roll please…) you need £31,300 a year to make those dreams a reality. That’s a £18,784 shortfall. Even the minimum retirement standard needs £14,400 a year for a single pensioner, which is a shortfall of £1,884 a year.
And don’t even get me started with the gender pensions gap, which further exacerbates this problem where women will need to work an extra 19 years2 to even think about bridging the retirement income gap of their male counterparts.
Drastic changes are needed
While the full UK State Pension is set to increase by 8% in April to just over £11,500 a year, it still won’t make any real difference given the cost-of-living crisis - energy costs, housing, increases in groceries and an unstable employment market have all put pressure on families and their financial situation. When it comes to feeding the kids today or putting money aside for retirement years down the line, we know what most people are going to do.
It’s time to get personal
So, we’ve established that there’s a gap between retirement living standards and the reality for most. But what influences the decisions people make, and can we make a difference?
While they are generalisations, one fact significantly influencing people’s attitudes to money is when they were born. For instance, whereas Baby Boomers (born 1946-1964) often stick to the same job or career as they started out in, Generation Z (1997-2010) and Generation Alpha (2010-2024) appear to be more transient. This presents challenges such as whether the latter end up with multiple small pots and may be encouraged by the development of a pot for life or Dashboards.
Those of us who work in the industry have a Duty of Care and responsibility to educate and provide tangible resources to people that are both in simple terms and easily accessible.
How can we help?
As retirement communication specialists, we have a key role to play in highlighting to clients (and their people) what reality could look like, what the options are and how to weigh them up in order to enjoy a retirement that’s better than basic. That support could include:
- Financial education;
- Informative wellbeing tools and resources; and
- Helping people to understand the impact opting out will have on their retirement savings.
Strategies from retiring later, increasing and/or matching employer contributions, reviewing their investment strategy and, if affordable, speaking with a financial adviser, can all help in showing people their options today to support a brighter tomorrow.
Being able to cut through the noise and help people to make informed decisions is crucial. We have seen the benefits of clear communication in achieving this time and time again with our clients. This includes a recent campaign using a multi-channel awareness campaign, supported by a personalised comparison tool, led to a 33% increase in matching. Another similar client was provided with a personalised direct marketing campaign supported by our Small Change Big Savings calculator which highlighted how making subtle changes (maybe going out for lunch on a Friday rather than buying lunch every day) can all support a better retirement future for them. Following the rollout of the tool, there was a 3% uplift in members making additional contributions. You may think this is not much, but it demonstrates more than just pounds and pence - behaviour change is incredibly difficult to achieve, especially if it means changing people’s everyday norms to save for retirement.
Our offer to the market
We developed our Hitting the Target modeller alongside the initial launch of the PLSA’s retirement living standards. It engages users in a fun, visually appealing and effective manner, creating a visual story of what retirement could look like depending on the choices they make.
But we also know that while not all pension schemes can afford online tools, all members deserve high quality communications. At Gallagher we truly want to impact, shape and change the wellbeing of the UK workforce and retirees. So, we are putting our money where our mouth is by offering new clients a 12-month subscription to our Hitting the Target modeller for the price of nine months3. We also want to provide additional support by way of a free awareness campaign for both new clients and existing clients who already subscribe to our modelleriv.
We are committed to helping shape a better retirement future and we have seen first-hand how good financial education, tools and resources can make all the difference.
To find out more please contact us.
1. According to the Office for National Statistics, the average life expectancy of a woman aged 55 today (February 2024) would be 32 years (so age 87) and the median pension pot size for all types of pensions is £32,700.
2. Now Pensions - Women would need to work an extra 19 years to close the gender pensions gap, 7 February, 2024
3. Terms and conditions apply including signing up for a minimum 12 month subscription to enjoy the 12 months for the price of nine months offer.
4. Postage, print and email sending expenses would be borne by the client – the offer is to provide a generic promotional postcard (PDF format), HTML email template and an article for inclusion in member newsletters.
