When communication doesn’t help

Despite being published on a Sunday, this BBC article about the April increase to auto-enrolment contribution rates didn’t escape our attention.

As communication consultants, you’d be forgiven for thinking our perspective would be ‘all publicity is good publicity’ but there are times when that’s not necessarily the case. This is one of them.

The headline is actually pretty alarmist and negative. You can argue it’s doing its bit to raise awareness but it’s not so easy to say that its raising understanding in equal measure…

If you read the article in full (and many won’t), it’s hard to see why the imminent 2% increase in employee contributions should trigger a significantly higher spike in opt-out rates than the last 2% increase in April 2018.

In the first three months after last year’s increase, the opt out rate was 0.7%. This was only very marginally higher than the previous 4 year average rate of 0.6%.

Since that increase, those who didn’t opt-out (that’s the other 99.3%) will have become used to seeing that 3% deduction. Yes, the incremental step-up to 5% will be noticed but the question is will it be noticed enough to significantly increase the number of existing members opting-out? We’re not so sure.

People being auto-enrolled for the first time could certainly feel that 5% is a bit steep, but a 2% increase when you’re already paying 3% is arguably going to feel less significant than a 2% increase when you’re only paying 1%. You could argue that the opt-out rate in this group may even be lower.

This was always one of the key points of the auto-enrolment design – action though inertia.

Headlines that focus on the ‘hit to pay packets’ and using the soundbites like ‘auto-enrolmageddon’ might be good for page views but by focussing on the negative they do little to help people understand why they need to save for retirement – which is the real story.