The Blog

Ms Millennial Money Reviews: Boring Money Pension Report 2024 

Is it time to bring in the celebs to make pensions sexy? 

By Sarah Penney, Ms Millennial Money

This week, I’m diving into pensions. While it’s a staple for journalists and influencers in the personal finance sphere, there’s still a lack of engagement in this corner of personal finance.  

Historically, pension providers have done a poor job of making pensions exciting, which is why the Boring Money Pensions Report 2024 is much needed. The report aims to shed light on how consumers, particularly the younger generations, feel about pensions and the extent to which they’re actively managing them. It seems there are signs of progress, albeit slowly. This is my take on the headlines from the report. 

The Auto-Enrolment Trap 

But, before we get into the detail, I want to highlight a misconception I held about pensions, and which I’m sure is a reason for low engagement. 

For a long time, I believed that automatic pension enrolment—one of the UK’s most successful behavioural policy interventions—meant I was set for retirement. When I was in full-time employment, I didn’t think about my pension for more than a second when I saw contributions coming out of my pay check; I expected a nice pot waiting for me at retirement. However, transitioning to self-employment forced me to take more control over my retirement savings and consolidating my previous workplace pensions into Pension Bee was enlightening, and depressing, to say the least! 

While auto-enrolment has increased participation in pension schemes, the reality is that standard contributions are insufficient. Default rates are set at 5% for employee contributions and an additional 3% from employers, saving only 8% is unlikely to provide many with a comfortable retirement. This is particularly alarming for young people, as 49% of those aged 22-29 are not saving enough to live above the poverty line in retirement. 

Fortunately, there’s still time for Gen Z to turn this around. This is where the Boring Money report plays a critical role in lighting a fire under the financial services industry to enhance efforts to engage younger savers. 

What’s The Report Saying? 

The Pensions Report 2024 provides a comprehensive overview of pension ownership, examining the factors that drive consumer actions in retirement planning. During the report’s launch, Boring Money’s founder, Holly Mackay, pointed out that while engagement in pensions has steadily improved—thanks to retail providers like Vanguard and Pension Bee—there remains a significant education gap. 

Here are a few striking statistics from the report: 

• Despite being the most popular savings and investment products in the UK, only 1 in 5 women earning £75k or more have a Self-Invested Personal Pension (SIPP). 

• 19% of pension holders have consolidated their pensions within the last 5 years, with this figure rising to 40% among those under 24.  

• A mere 8% of non-retired pension holders consolidated some or all of their pensions last year.  

• Workplace pension holders report the lowest levels of engagement compared to personal pension holders, who exhibit higher involvement.  

• A staggering 63% of defined benefit (DB) pension holders find pensions confusing.  

• A lack of accessible information remains a key barrier preventing individuals from switching pension providers. 

Witnessing increased engagement from Gen Z in pensions is encouraging and reflects broader trends in the market. Unsurprisingly though, just like me, those with workplace pensions tend to be the least engaged. 

The data indicates that financially savvy Gen Z-ers—a rapidly growing demographic—are actively managing their retirement savings, most likely alongside other investments. However, there’s still a noticeable engagement gap that needs addressing. The industry must work harder to bridge this divide, especially when considering the growing importance of financial literacy among young people. 

How To Bridge The Engagement Gap? 

One of the key barriers highlighted in the report is a lack of accessible information. The truth is, there’s no shortage of pension-related information out there; it often just isn’t exciting, easily digestible, or being put in front of the people who need it.  

Pension Bee is a fresh and successful entrant into the traditional pension space. Their user-friendly app offers straightforward projections and insights, and their marketing is visually appealing and gender-neutral. However, I believe providers like these have an untapped potential to connect with Gen Z in a more meaningful way. 

To truly engage this younger audience, the industry should look to unconventional approaches, like that from the “Pay Your Pension Some Attention” campaign launched earlier this year. Featuring reality star Gemma Collins as an unexpected “finfluencer,” the campaign successfully communicated its key message – to take notice of one’s pension. Granted, there were some grumbles from the industry about using such a figure in financial services communications, but this is exactly what we need! The same old marketing and communications aren’t cutting through. Gen Z consumes information in different ways and there has to be a recognition of this and a change of strategy to move the needle.  

The Boring Money Pensions Report provides valuable insights for the financial sector, underscoring the urgency for them to enhance their engagement efforts. My hope is that they seize this opportunity to innovate and reshape the narrative around pensions, making them appealing to younger generations. 

Access the Pensions Report 2024 here.  

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