BA targets better comms after RPI-CPI troubles

APS replaced the retail price index with CPI to cap pension increases in April 2011 following chancellor George Osborne’s emergency budget in 2010. 

Members of the APS argued they had already paid for RPI-linked increases and so should receive RPI-linked benefits.

The issue flared up again at a recent meeting where active and retired members voiced their outrage at the scheme's failure to reinstate RPI.

Paul Spencer, chairman of APS, spoke at the meeting where the scheme's trustees, actuaries and lawyers were also present. 

Angry members swore at scheme representatives and stressed they could have "invested the money better themselves". 

Spencer said: "There are always ways we could have handled it better – particularly in regards to communication.

"One of the areas we have tried very hard to improve on is to overcommunicate and explain to members what can be a very complex situation."

Schemes that fail to effectively communicate and educate their members of major decisions run the risk of causing resentment and disengagement.

British Airways' struggle

Before the RPI-CPI switch, the closed scheme communicated with its members once a year. 

At every trustee board meeting we now produce a paper that really tells members where we are

Paul Spencer, Airways Pension Scheme

Members protested the change during meetings held by the 31,174 member strong APS scheme in 2011 and 2012 [source NAPF Yearbook 2012].

Spencer said he understood why some members felt aggrieved at the prospect of losing RPI-linked benefits.

"Put yourself in the position of the member, deferred or active," he said.

"Understand for many, many years they have been expecting their pension will increase with the RPI index. Suddenly they are told their pension will go up 1 per cent possibly less than it would have." 

The problem arose as British Airways was "not a very strong sponsor" and the scheme could not make decisions based on expected support alone, Spencer said.  

APS has now changed the frequency of its communication strategy to a minimum of four times a year, using online where possible and supported by print communications. 

"At every trustee board meeting we now produce a paper that really tells members where we are," Spencer said. 

He said since the meeting in 2011 the board has had 66 meetings on various issues and a round-robin letter was circulated after each meeting.

But Mike Post, a former pensioner-elected trustee of the scheme, said the scheme's failings had "nothing to do with bad communication", but with its loss of RPI-linked pension increases.

He said: "[The] contention that if the trustee board  improves communication, the problem will be solved, is nonsense which will dismay pensioners, especially the poorest, who are looking forward to a bleak future of CPI increases.

"Spin, in which Mr Spencer apparently now intends to indulge by sending out more frequent self-serving propaganda, is bad communication which will only serve to irritate APS pensioners."

How to prevent mass member revolt 

Schemes that fail to effectively communicate with their members face the potential threat of expensive court cases. 

Be honest, clear and transparent, tell it to them like it is

Hannah Clarke, Ferrier Pearce

Faith Dickson, partner at Sackers, said schemes should only fear legal proceedings if members had been supplied misleading information.

"Even if the change from RPI to CPI has been badly explained, it will be difficult for members to show they have relied on information to their detriment," Dickinson said. 

Careful communication can educate members so they are fully prepared for changes to the scheme.

Well-placed campaigns can also help members understand which decisions they are responsible for and which are out of the scheme's control. 

Hannah Clarke, pensions communication consultant at Ferrier Pearce, said: "Good practice is to build up an ongoing, two-way dialogue with the members, founded on trust.

"To get there, you need to be honest, clear and transparent, to tell it to them like it is, whether the news is good or bad."

She said schemes should help members picture what the changes mean to them by using case studies of people they can relate to. 

Graphs, pictures, or models could be used, depending on the preference of the workforce.

"Market segmentation is the key," she added. "Use data available to you – such as gender, salary, age, type of role – to divide the audience in to similar groups and then devise case studies particular to each group."