Giving retiring customers a single page of A4 paper instead of the usual 50-100 page wake up pack makes them 10 times more likely to visit Pension Wise, research between LV= and the body previously knowns as the ‘nudge unit’ has discovered.
The research was undertaken by the Behavioural Insights Team (BIT) which stared out as a department inside No 10 and which was later spun out to became a ‘social purpose company’ jointly owned by the UK government; Nesta and its employees.
The Pension Passport consolidated essential information from the 50–100-page ‘wake-up pack’ sent to customers approaching retirement by providers, onto one side of A4 paper.
The Pension Passport included the personalised information a customer needs to access open-market retirement product options and a clear call to action to visit the Pension Wise website. Those receiving the new single-page Pension Passport were 10 times more likely to visit the Pension Wise website compared to those receiving the usual wakeup pack.
In follow up phone interviews BIT discovered customers were 26% more likely to start with the Pension Wise website as a next step in their retirement journey relative to the control group and 24% more likely to say the information they were sent prompted them into taking action.
It said that in light of these findings, LV= committed to overhauling all wakeup packs to effectively signpost consumers to guidance and advice about their retirement options.
BIT said: ‘There are few decisions we face more important than how we prepare for our retirement. Making informed decisions about retirement options can have a huge impact on peoples’ future income and quality of life, yet for many consumers, information about retirement options can feel complex and overwhelming.
‘By distilling the wakeup pack into one page of simple, salient and personalised information, alongside a checklist of next steps, we increased engagement with the Pension Wise website and calls to the Pension Wise booking line.’
The publication of this discovery closely follows news that Richard Thaler, the economist who devised nudged theory, itself the basis for workplace pension auto-enrolment, will be awarded the Nobel Prize for Economics.
While the Pension Passport was successful for LV= two other providers also took part in the study, trialling different approaches. These provide much less successful.
From March to April 2015 Royal London placed the standard Pension Wise signpost at the front of the wakeup pack instead of somewhere in the middle (the packs range from 30-70-pages). The pack was also personalised. The intervention resulted in a statistically-significant decrease of 2.6 percentage points in the likelihood of visiting the Pension Wise website.
From April to July 2015 Standard Life printed the Pension Wise signpost letter ion Orange paper so that it stood out among the other documents in the wakeup pack. BIT said this resulted in a 0.2 percentage point increase in the likelihood of visiting Pension Wise. BIT said while the headline rate is not statistically significant there were more significant positive effects when broken down by customer group.
Read the full report here.