Pensions insight
people with good pensions will have more money to spoil their grandkids, to ensure their children’s financial stability and to be with their families and friends, instead of working. Yes, it might be hard for people to get their head around something that might not pay out for another forty-plus years. But it will ultimately mean they can enjoy their time with those they love without worrying about their finances – a great call to action. ● Guilt – The flip side is the guilt of someone who is not able to support his or her family in retirement – and in fact, becomes a drain on their resources. How would they feel if they had nothing other than the state pension to rely on in later life? Many people who don’t plan for their retirement find themselves living on the state pension, which can be a huge shock. Even if they just about get by and pay for their heating and eating, it will be a frugal existence – so who’s going to take care of them? In many cases, it will be the next generation. Nobody wants to be a financial burden on their children – yet that is what could happen for those who don’t make
the right provision, and that can lead to guilt in old age. This fate is easily avoided with the right planning, though, so tie in a solution with this message. Rather than simply highlighting how guilty people might feel, show them how they can avoid ending up in that position.
money has come from can add to that impact. A chart highlighting employee and employer contributions along with the tax relief will highlight just how much money they have accumulated in return for a relatively small sacrifice from their own income. And once the growth of the pension pot is included, too, the result can be even more impressive. Emphasising that someone who has paid in, say, £25,000, now has a pot worth perhaps £80,000 is a sure-fire way to trigger a positive emotion. People who save with a bank can also see that money grow each month. But nowadays, that growth is likely to be modest and the majority will come from people’s own contributions. With a pension plan, the relatively huge impact of the employer’s and government’s contributions can look like a bargain. Making that information big and bold in an annual statement can engender a very positive response. It is likely to cement people’s belief that they are acting smartly and reassure them they should maintain course – or possibly increase contributions. n
...perfect opportunity to appeal to this emotion via people’s annual pension statements
● Satisfaction – People like to be proved right, so affirmation they’ve been doing the right thing makes them feel good. There’s the perfect opportunity to appeal to this emotion via people’s annual pension statements. Showing them just how quickly their pension pots have grown can provide them with instant satisfaction, and a clear breakdown of where all the
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| Professional in Payroll, Pensions and Reward |
Issue 42 | July - August 2018
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