The Stronger Nudge

• Description of the programme
• The study
• Key findings
• Points to consider

Description of the programme

In his 2014 budget, the Chancellor of the Exchequer announced the Pension Freedom reforms, which sought to give people more control over how they access their defined contribution pensions. To accompany this policy change, the Chancellor announced a ‘guidance guarantee’, providing everyone with the option of having guidance from the age of 50 to help them understand the new options and make more informed decisions.

Pension Wise was created to deliver this guidance in the form of telephone and face-to-face appointments, and the 2018/2019 Pension Wise Service Evaluation found high levels of satisfaction with the service.

To boost engagement with this guidance, two behaviourally-informed ‘Stronger Nudge’ interventions were developed, to be tested during calls from customers to three pension companies – Aviva, Legal & General and Hargreaves Lansdown. In one intervention, customers were offered a Pension wise appointment booked by the call handler at the pension company. In the other intervention, customers were offered a ‘warm transfer’ straight to Pension Wise.

The study

The Money and Pensions Service commissioned the Behavioural Insights Team in 2020 to support the development, and evaluate the impact of, the ‘Stronger Nudge’ interventions on the number of people who receive Pension Wise Guidance.

The impact of the interventions was tested using a randomised control trial (RCT), in which changes observed in the two intervention groups were compared against a control group that did not receive any intervention. Call handlers at each of the pension providers were randomly allocated to deliver either Treatment 1 (the online booking intervention), Treatment 2 (the warm transfer), or to be in the control group.

This was complemented by an implementation and process evaluation to explore how the interventions were delivered in practice and to examine staff and customer experiences.

Customers who had received advice within the previous 12 months were excluded from the analysis. After removing these, 4,135 pension savers remained in the sample, with 44% in the control group, 28% in Treatment Group 1, and 27% in Treatment Group 2.

The trial was conducted between October 2019 and February 2020.

Key findings

• Impact evaluation: Both interventions were successful in encouraging pension savers to book and attend a Pension Wise appointment.
• Impact on pension savers booking a PW appointment: Around one-in-seven callers (14%) booked a Pension Wise appointment, compared to just 3% of the control group.
• Impact on pension savers attending a PW appointment: About 11% of pension savers received Pension Wise guidance as a result of the interventions in comparison to 3% in the control group. There was no evidence of a significant difference between the two intervention types.
• Further analysis was undertaken to assess whether the results were affected by age, gender, amount of retirement savings and other characteristics. However, no statistically significant relationships were found.
• In follow-up interviews, pension savers indicated several factors that influenced their decision to take an appointment. The most frequently given reason to decline an appointment was that the pension holder felt they already had sufficient knowledge. Those who reported they had moderate levels of pension knowledge were the most likely to accept an appointment.
• Delivery staff and call handlers reported that both the online booking system and warm transfer interventions were convenient and easy to manage. The warm transfer process was felt to be more time-efficient for staff.
• The implementation of the interventions varied by pension provider due to changes to the training programme and delivery plans. Staff training varied from a five-minute briefing to a full day intensive training session.
• Some staff felt that they had to adapt the pre-prepared script so it felt less formulaic, though this did not adversely affect the delivery of the intervention.
• Despite these issues with the ‘forced’ nature of the script, overall it was felt that the interventions were successfully delivered.

Points to consider

• Methodological strengths/weaknesses: Some of the findings are tested for statistical significance, adding more robustness to the analysis. A control group is used, allowing findings from the intervention group to be compared with an external group for benchmarking purposes.
• Generalisability/ transferability: The evaluation is of significant interest to those looking to use nudge theory to boost numbers accessing financial advice, particularly in relation to pension savings.
• Relevance: The findings are based on pension customers from around the UK, though are not weighted to be nationally representative.