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Responsible investment communications found to build trust and confidence, but less effective at driving first time pension engagement

  • Keep pension communications straightforward and personalised to encourage first time engagement from automatically enrolled savers.
  • Responsible investment messages can be more effective among those who say ESG issues are very important.
  • Talking to savers about responsible investment can help build confidence, increase awareness that pension savings are invested, and build trust in pensions and scheme providers.

New research published today by Nest Insight challenges the commonly held view that talking to disengaged pension savers about responsible investment and environmental, social and governance (ESG) issues could be a widely effective way to prompt people to engage for the first time.

Whilst findings from research surveys have concluded that the approach could be powerful, to date there has been limited real-world evidence on how people’s stated intentions translate into actual behaviours. The research, supported by Legal & General Investment Management (LGIM), explored whether responsible investment communications can engage pension savers, who have never logged into their pension account, more effectively than standard approaches. Through a behavioural email messaging trial conducted with 35,000 unregistered contributing Nest members, the real-life impact on engagement levels was assessed by measuring open rates, click through rates, and account registrations.

Keep messages simple and focused on the ‘call to action’ to drive first time engagements

The research found that a standard account activation email, with no mention of investment or responsible investing, resulted in higher open and click through rates, and the strongest impact on member registrations, regardless of age, gender, salary or employment industry, when compared with emails talking about responsible investment in different ways.

These findings suggest that care should be taken with communications about responsible investment, depending on the target audience and the engagement objective. For a disengaged audience, a straightforward message, or personalised communication, may be more effective to prompt people to engage with their pension account for the first time.

The opportunity cost of using a less engaging message to prompt account activation could be high

The research findings suggest that the first step in the engagement journey, in which people are encouraged to log into their account for the first time, could be an important door opener to other engagement and action. Among those who registered their account in the month following the trial:

  • 88% said they knew how much they contributed to their pension, compared to 74% of those who did not register their account.
  • 80% said they knew how much their employer contributes to their pension each pay period, compared to 69% of those who did not register their account.
  • 52% said they knew how much they will have saved in their pension(s) by the time they retire, compared to 34% of those who did not register their account.
  • 69% said they knew the current size of their pension pot, compared to 40% of those who did not register their account.
  • 42% said they knew how their pension pot is invested, compared to 27% of those who did not register their account.

To encourage members to take actions that can have a positive impact on their retirement savings, test and learn trials like this can help schemes to pick the most effective messages for different target groups.

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