The UK government via the Department for Work and Pensions (DWP) has kicked off an advertising campaign in earnest to boost awareness of the introduction of auto-enrolment next month.
Auto-enrolment is a watered-down version of mandatory saving as consumers can opt out, even after being re-enrolled. The rationale being that apathy (to opt out) will boost participation and add to the numbers of those who actively choose to remain in a pension once signed-up.
Sandwiched between adverts for payday loans, annoying comparison website jingles and supermarket specials is the DWP-backed television advert campaign aimed at raising awareness of new workplace pension changes that will see the staged introduction of eligible employees in the UK into a workplace pension scheme.
But it is questionable whether these 45-second clips will help the large swathe of employees who may still opt out of this initiative.
A recent CoreData study on auto-enrolment finds that 48.4% of employees are not sure whether they will opt out of the workplace pension scheme in which they will automatically be placed.
Around one in six plan state their intention to opt out.
The government is hoping for the general inertia people exhibit toward financial decisions to work in its favour but any media coverage in the run-up to implementation (which begins in October) may have some sway on the decision of employees who have not yet made up their minds.
Whether this impact will be positive or negative is yet to be seen. The adverts feature “big bosses” like Theo Paphitis (an entrepreneur whose popularity grew as a result of the TV show Dragon’s Den) and Karren Brady (who also became popular through her appearance on The Apprentice). The campaign will run across TV, radio, print and online media.
Arguably, the content, which involves the above personalities and others saying “I’m in” with a short blurb about workplace pensions at the end, does little to help people understand the benefits of a workplace pension scheme.
According to Steve Webb, the pensions minister: “They [the consumers] have been bombarded with negative messages about pensions every day and we need a positive communication… the positive reasons for being in a pension.”
However, the jury is still out on how the masses will react to these messages. Webb is quoted saying: “People should know that all they need to do is look out for a letter from their employer and if they do nothing and stay in they are effectively getting a pay rise.”
The auto-enrolment rules require a minimum contribution of 8% with the employer being accountable for a minimum of 3%. In cases where employees are made to foot the additional 5%, it is unlikely that these individuals will consider this to be a pay rise. They are more likely to think that their gross income has been reduced by 5%, regardless of the investment in their future.
Consumers are often known to be short-termist in their outlook and having the potential to opt-out may drive some of the 48.4% who have not yet made up their mind to not contribute to their workplace pension rather than reduce their current income.
The truth is that no amount of adverts in the media will make people want to have less money in their pocket today, especially in an environment where people feel they do not have enough income to put toward savings. What is needed is improved education about pensions across the board and although auto-enrolment is a start a full-blown culture change is probably far from a reality.
The DWP says the entire auto-enrolment awareness campaign will cost £8.1m and the celebrities featured in the adverts gave their time and services free of charge. Time (and numbers) will tell whether that money was well-spent.