Pension risk transfers: How can we best manage employee anxiety?

UK risk transfer deals doubled from £12.2bn in 2017 to £24bn in 2018 according to actuaries Hymans Robertson, and the UK pension risk transfer market is set to break a new record this year.

One of the most challenging elements of any pension change process is managing the reaction of employees. Although many of us may confess our disinterest in pensions, it is human nature to react negatively when we are asked to engage with our retirement savings – even if it is in our best interests, but especially if benefits are being withdrawn or conditions appear to be worsened. Indeed, employees will be suspicious of any changes in an area known to be complex and laden with difficult language.

Scheme trustees and managers, working with their HR and reward colleagues, can help minimise the adverse reaction of employees when the time comes to make an announcement. A successful communication process will depend on the timing, substance and style of the message and the manner in which it is delivered.

Choose the right timing

Be mindful of the emotional impact of your campaign – particularly if you are asking members to make a financial decision, and one they had not been expecting to make. Consider any other changes that are taking place within your workplace that could distract or derail your campaign.

Consider your message style and tone

First of all, use language that people understand – avoid information overload and make your message as clear and simple as possible to get the message across. But also make sure your words are authentic and empathetic – after all, you are trying to manage an emotional response that may impact on employee morale and productivity.

Remember that people respond to change in different ways. In my experience, younger people tend to be more accepting of pension changes than older colleagues. This may be because older colleagues are more focused on life after work and the impact any change may have on their plans, but younger people have grown up in an ever-changing world and do not expect anything to remain the same.

Get the content right

Be open, honest and transparent about the changes – if it is bad news, do not try to pretend otherwise, and be clear what this means for the individual. Explain the reasons for the change so employees understand how and why the organisation has made this decision.

Make sure your message sets out the next steps and gives clear channels for submitting feedback where appropriate.

Also be mindful of the detail your lawyers expect to see, so present your communication to them for review as close to the final draft as possible.

Use effective channels

Use communication channels that are convenient and reach out to all your people. Brief and support senior managers and frontline staff representatives, equipping them to either answer simple questions or point colleagues in the right direction to find out more.

Managing the response

Keep control of your message and respond quickly to rumours and misinformation – ensuring you have back-up statements and Q&As ready, especially in the case of a major change involving benefit reductions. Do not forget those who are out of scope but who may hear about your campaign second hand.

Make sure you are prepared to adapt your communication strategy as the campaign progresses, addressing questions as they arise – ideally in an open forum as this will help with transparency.

Finally, be ready to send out additional communications if necessary. Work with your PR teams on a press statement and media strategy if you suspect negative messages may reach the local or national media, impacting on your organisation’s reputation.

Sue Cox is a senior communications consultant at like minds