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Data driven member communications

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Member analytics across industries

• Delivered over 250 member analytics projects since 2015

• Industries include:

– Public sector

– Publishing

– Oil and gas

– Retail

– Technology/Software

– Media

– Legal

– Financial

• Behaviour tends to be consistent across industries

– Demographics-centric analytics

– Core methodologies that work across industries

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Member Analytics – it’s what the supermarkets do

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Member Analytics

Pensions analytics built upon a data

driven understanding of the

membership:

• ‘Who’ members are – are they

even open to engagement vs

hungry for more

• Where members are in life- work

life stage

• Demographics

Data driven decision making in

pensions:

• Engagement drives and comms

• Education

• Targeted Surveys

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Pension Member Analytics

Evidence Based Decision Making

• Evidence – such as data – used to drive decisions and monitor progress

• Pensions engagement must be built upon an understanding of the membership

– ‘Who’ members are – are they even open to engagement vs hungry for more

– Where members are in life

Engagement Segmentation For DB schemes

• Propensity to Engage

– Drives who and how to target

– Measure effectiveness of campaigns

– Derived from membership demographics and behavioural patterns

• Work Life Stage

– Where people are in life impacts communications and other actions

– Target campaigns and actions

Other Segmentation Approaches

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Propensity to engage in retirement savings

The key determinants and their influences on an individual’s propensity to engage are as follows:

– Age and Service Retirement savings, engagement and planning behaviour typically increase with

age and service years. Therefore we expect younger members or members with

fewer service years to be less likely to engage with their pensions.

– Gender Males are more likely, on average, than females to make retirement planning

decisions although females are generally more responsive to communication and

guidance.

– Salary On average, members with higher salaries are more likely to have a higher level

of financial literacy. They are also more likely to have other savings and

investments and will be less likely to be able to rely on State benefits. As a result,

members with higher salaries will have a higher propensity to engage and make

savings decisions.

– Taken Action Members who have chosen to buy years or other actions.

We identify 3 broad groups of individual in relation to their propensity to engage – passive savers, limited personalisers

and independent choicemakers.

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References

• Bajtelsmit, V L (1999): “Evidence of risk aversion in the health and retirement study”

• Barber, B M, and Odean T (2001): “Boys will be boys: Gender, overconfidence, and common stock investment”

• Barsky, R B, et al (1997): "Preference parameters and behavioural heterogeneity: An experimental approach in the

health and retirement study“

• Bodie, Z, Merton, C M & Samuelson, W F (1992): “Labour supply flexibility and portfolio choice”

• Cardinele, M, Katz, G, Kumar, J & Orszag, M (2005): “Background risk and pensions”

• Dulebohn, J H and Murray, B (2008): “Understanding risk taking in retirement savings through attitude”

• Edwards, R D (2007): “Health risk and portfolio choice”

• Engstrom, S and Westerberg, A (2003): ”Which individuals make active investment decisions in the new Swedish

pension system?”

• Hallahan, T A, Faff, R W and Mckenzie, M D (2004): “An empirical investigation of personal financial risk tolerance”

• Heaton, J & Lucas, D (2000): “Portfolio choice in the presence of background risk”

• Madrian, B C and Shea, D (2001): “The power of suggestion: inertia in 401(k) participation and saving behaviour”

• Papke L E (1998): “How are participants investing their accounts in participant directed individual account pension plans?”

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Engagement Segments

Members unwilling and/or unable to engage with their

retirement savings.

These members will always follow the default or the

‘path of least resistance’.

Members willing and able to personalise their retirement

savings, albeit only in a limited way.

These members want limited, easy to understand

choices with supporting help and guidance.

Members willing and able to engage fully with their

retirement savings.

These members want a range of good quality, suitable

choices.

Passive

Savers

Limited

Personalisers

Independent

Choicemakers

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Work Life Cycle Segments

Just starting work – early stage career. Opportunity to

educate and help understand the value of their teaching

pension.Starting out

Focused on building career, family, etc. Retirement is often

not a primary focus. Mid career

Nearing retirement. Segment can be further broken down

based on support needs as retirement nears.

Countdown to

Retirement

Communication and support needs specific to post-

retirement life.Retired

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Countdown To Retirement

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Engagement Segmentation frameworkWho are my members?

10%

20%

4%

Passive Savers

Limited

Personalisers

Independent

Choicemakers

7% 8% 5%

10% 15% 10%

1% 7% 3%

34% 18% 30% 18%

30%

55%

15%

Starting Out Mid Career Countdown

to Retirement

Retired

Work Life stage

Pro

pensity t

o E

ngage

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Engagement Segmentation FrameworkWork Life Stage = content, Propensity to Engage = tone

Content: Focus on

pension as part of

being a teacher

Tone: Key features,

plain language, to the

point.

Content: Focus on

pension as part of

being a teacher

Tone: Reassurance,

emphasis on invite to

learn more

Content: Focus on

pension as part of

being a teacher

Tone: Sophisticated,

financial

Passive Savers

Limited

Personalisers

Independent

Choicemakers

Content: Decisions

you need to make

Tone: Key features,

plain language, to the

point.

Content: Value of

the scheme, choices

you have

Tone: Key features,

plain language, to the

point.

Content: Value of

the scheme, choices

you have

Tone: Reassurance,

emphasis on invite to

learn more

Content: Decisions

you need to make

Tone: Reassurance,

emphasis on invite to

learn more

Content: Value of

the scheme, choices

you have

Tone: Sophisticated,

financial

Content: Decisions

you need to make

Tone: Sophisticated,

financial

Starting Out Mid CareerCountdown

to Retirement

Work Life stage

Pro

pensity t

o E

ngage

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Member segmentation in a live environment

• Targeting – define aims, plan/strategy for each segment.

• Test responses to campaigns relative to segments and demographics

• Adjust:

– Campaign based on responses (channel, behaviour, re-target segments with low/high response, etc.)

– Segmentation parameters based on responses

• Overlay additional segmentation

– Experian, behavioural metrics, persona based models, etc.

• If you want to get more sophisticated:

– ‘Segment of One’

– Find top X most similar

– Segment based on majority

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• Data driven

• Member centric

• Evidence based

• Individualised service is becoming feasible

• Member education and support

Over 200 analytics driven governance, fund design

and communications engagements in 2015

What does this all mean?Current Trends in Pension Analytics