Almost two-thirds (63%) of employers’ pension communications to their staff end up in the bin, either unread or barely understood, according to a survey by independent benefits and investment consultant Hymans Robertson.

The overwhelming majority of employees want direct, face-to-face communication.  Over 80% find printed pensions information confusing and “full of gobbledygook”.

The survey highlights employers’ difficulty in encouraging employees to engage with pensions issues.  Although 57% employees say that their employers are doing a good job in communicating information to them, over 50% of employees said that they had at some time misunderstood pensions-related communication.

Other key findings were:

• Over 80% of employees who were not members of a pension scheme had flawed reasoning for not joining a scheme.
• One in five doesn’t think there is a scheme available (rising to 35% for those in smaller organisations) and one in five say they can’t afford the contributions.
• Female workers were 70% more likely than their male counterparts to say that they were confused by pensions information.
• One in five employees doesn’t know where to go for help in understanding their pension and only 50% sought guidance.
• 55% of employers don’t have a formal pensions communication policy.
• 89% of Pension and HR Managers say that their pension scheme members are ‘engaged’, yet only 6% of employers have hard evidence of members’ engagement.

Helen McArthur, Head of Communication and Engagement at Hymans Robertson, said:  “The rapid demise of Defined Benefit schemes has led to more people being enrolled in employers’ recommended Defined Contribution pension schemes.  This means that employees now have to develop some understanding of complex financial issues such as asset classes, investment risk and annuity markets.  Employees’ knowledge of and, crucially, engagement with pensions issues is influenced by the quality of communication provided by their employers.  Our survey shows that despite employers’ best efforts, there is a great divide between the British public and their pensions.

“It’s absurd for employers to be charged solely with changing a national mindset:  personal finance education should start in the classroom and, ultimately, it’s up to the individual to take responsibility for his or her retirement planning. However, employers, collaborating with scheme trustees and external financial advisors, have a vital part to play here.  Good communication isn’t about sending people obligatory information; that approach will never foster understanding and engagement.  Communication has to be genuinely interactive: employees should be given help in scenario planning so that they can understand their specific circumstances. They should be encouraged to develop more knowledge about what kind of investor they are and how much they need to save to ensure an adequate retirement income.

“Our survey indicates that most employees want direct, verbal communication.  Clearly this would be very difficult for large organisations, but employers should consider introducing some limited element of regular face-to-face contact.”

To access our full report please click here.