New research undertaken by Professional Pensions has indicated that despite the undoubted success of auto enrolment in bringing more than eight million into workplace pensions, more needs to be done to encourage millennials to save for retirement. Millennials is the common term for those people born from age 1980 onwards, also known as Generation Y.
The research shows that over 50% of millennials were not being encouraged to save for their workplace pension by their employer, highlighting the need for action to be taken. Starting investing even a small amount of money into a workplace pension at say age 20 can make a huge difference down the line to their prospects of having a comfortable retirement. More needs to be done by schemes to communicate effectively with this age group to encourage good savings behaviour.
Former pensions minister Sir Steve Webb, who was instrumental in the introduction of auto enrolment says a lot of the industry tends to "finger wag" and "tell the young generation off." He suggests using better language that is enabling, supportive and not disapproving.
"If you use coffee as an example, where you see a young person with a posh coffee in their hand, telling them they're a terrible person for enjoying it and should put it in a pension is just not going to work. Instead, schemes should say, 'yes, you can have a coffee now, no problem, but consider your later life choices'."
He also suggests that a digital-first strategy should be adopted to take into account that millennials are a digitally literate generation. He suggests getting nudges on smartphones could be a very effective way of engaging with them.
"Members could get notifications saying, 'Happy birthday, put some more into your pension,' or if you change jobs, an app could notify the member saying, 'I've seen you've changed your job, this is a good time to review your pension'."