The big communications challenge

Topic:

Hot topic

Date published:

Monday, 3 August 2015

Author:

Gillian Graham

Earlier this year, Sackers released a survey about how pensions schemes are dealing with the new pension flexibilities announced in the 2014 Budget. I found one result in particular fascinating - the fact that 85% of schemes felt member communication was their greatest challenge in 2015.

Fast forward a couple of months and it was standing room only at the session I chaired at Pension and Benefits UK on communicating pension flexibilities, which echoed Sackers’ findings and highlighted that this is widely recognised as a huge challenge.

I think many pension trustees would admit their member communications fall in the ‘could do better’ camp. Whilst regulated entities need to include a mass of small print to meet FCA requirements, there really isn’t any excuse for trustees. They are free to write in jargon-free plain English (a prerequisite for clarity) and, given the advisers around them, should be able to produce communications that are targeted, attractive and easy for members to read.

The reality is very different for many trust-based schemes, which often roll out a newsletter in the same old-fashioned format year after year. This may meet the requirement to provide a summary funding statement, and accurate they may be, but I suspect many fail the impact and clarity test! Taking a step back and trying to look at them independently, I think most people would say many pensions communications also fail the ‘would my mum understand it?’ test.

Last year’s Budget changes mean schemes need to make additional communications to help members understand the choices available to them and the importance of seeking guidance and advice when making decisions about how to take their retirement benefits. It affects all schemes - defined benefit (DB), defined contribution (DC) and hybrid - and it is so important to do this right.

The Pensions Regulator’s guidance on communicating with members about pensions flexibilities is helpful, but trustees and scheme managers need to go further and, once and for all, put themselves in the member’s shoes and ask, “What type of communication would really work for me?”

The new pension freedoms should be a good wake-up call for pension trustees and sponsoring employers. We all need to make sure members have a greater understanding of their pension scheme’s benefits and options. After all, companies are spending a huge amount on pensions and a return on that investment is needed. More effective and engaging communications can help deliver that return, as well as truly helping members. That’s why trustees should take a fresh look at what they are saying to members and how they are saying it.

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