Pensions Conference 2012 - Hot Research Workshop - Can transforming consumer information stop people from sleepwalking into retirement?

At this year’s conference there was a new addition of “hot research” workshops, which gave a number of working parties the opportunity to showcase their ideas and to seek feedback and comments from delegates.  One such workshop was jointly presented by the transforming consumer information working party and the sleepwalking into retirement working party.

The first of these two working parties had established three principles for good consumer information:

• Communicate savings progress relative to the consumer’s goal
• Communicate risk and reward by reference to the chances of achieving the consumer’s goal
• Ensure that communications are engaging, easy to digest and free of bias

The second working party noted that while pensions professionals and the media are aware of the problem of people sleepwalking into retirement, consumer behaviour is not changing.  Actuaries have the expertise, integrity and independence to be able to help the public to understand the issues that they need to address.  It is envisaged that we can provide tools for others to use to communicate with the public, rather than necessarily providing direct advice.

A simple spreadsheet model has been created, which segments the population into groups, in line with a structure set out by Experian.  The model can provide individuals with an estimated retirement age, based on their assumed current behaviours (level of savings etc) and their likely required income in retirement.  If the individual wishes to retire before that age, then the model can illustrate what action they need to take eg save more or accept a lower retirement income.  The working parties intend to take the model to other groups such as the NAPF and Age Concern to see if they would find it useful.

It was noted that care would be required so that people did not see the model output as being guaranteed and also that people understood that retirement planning is an ongoing process and they cannot simply use this model once and then assume their retirement planning is sorted forever.

Overall, the model is intended to be a tool for the industry, not for individuals.  It is intended to give people a nudge and wake them up and encourage them to take some action to plan for their own retirement.