With the world of pensions constantly changing, employers and trustees are investing more time, effort and resources into liaising with members, but face-to-face communication has been deemed particularly effective when it comes to bad news.
Since the introduction of freedom and choice, and with many employers taking action to tackle the expense of running a defined benefit pension scheme, an increasing number of schemes are revamping their communication strategies to explain changes to members.
It worries me that we’ll lose some control over what members understand, if it’s all on the dashboard
Ellie McKinnon, The Cheviot Trust
In September last year, the Canal and River Trust closed its DB pension scheme to future accrual following a 60-day consultation and introduced a new defined contribution scheme and auto-enrolment.
Ian Jarvis, financial controller at the charity, spoke at a recent Pensions and Lifetime Savings Association seminar about how the news was explained to members, noting that face-to-face communication was particularly effective.
Sugar-coating the pill
Although closing the scheme “was a pretty unpalatable message” to give to staff, Jarvis said that the way it was communicated resulted in a “far higher level of engagement than we have ever had before”.
Members not only received letters and a booklet outlining the changes, but also had access to a telephone helpline, roadshows and a website. However, the latter “didn’t get very many hits”, showing that the way a scheme communicates with members depends on certain factors, including their age profile.
He said that “we realised very early on” that the age profile of members – 75 per cent of staff are over 45 – meant that they were less likely to engage digitally.
Face-to-face can be more effective
One of the most popular methods of communication for the scheme, which has 900 active members, was the introduction of one-to-one meetings, an offer that 450 members of staff took up, said Jarvis.
Similarly, Gill Monk, head of pensions at telecommunications provider O2, said face-to-face communication played an important role as part of the communication overhaul at the pension scheme run by its Spanish parent, Telefónica, which included the introduction of a new pensions modelling tool.
While O2’s digitally focused member communications differ greatly from some of the more traditional methods used by the Canal and River Trust, both sponsoring employers found liaising with members in person was useful.
Telefónica rings the changes with pensions modelling tool
A new online pensions modeller is being launched for defined contribution members of the Telefónica UK Pension Plan, but some experts have questioned the benefit of such tools.
For example, following legislative changes, the O2 scheme had to explain to many high-earning employees that their annual allowance was reducing, and that they may need to take action.
This was not the kind of message “that your high earners are going to really thank you for”, said Monk. Consequently, it was decided to have face-to-face presentations to communicate this, as well as a number of webinars, she said.
Monk added that communicating the news in person created “quite a buzz”, and members fed back that although they did not like the message, they did approve of the delivery.
Will the dashboard dilute member comms?
Ellie McKinnon, chief executive at mastertrust The Cheviot Trust, supports the principle of the pensions dashboard. However, she said that “we work really hard” on getting communication right. “I’m just slightly worried that they’re all going to get diluted,” she said, because people may “be governed by what the communication says” on the dashboard.
McKinnon added that the dashboard would be unable to give members "the nuances of our scheme”, tell them that there are member-nominated trustees on the board to represent them, or explain the investment strategy specific to the scheme.
“It worries me that we’ll lose some control over what members understand, if it’s all on the dashboard,” she added.
Improved efficiency
However, Patrick Heath-Lay, chief executive of mastertrust The People’s Pension, highlighted the way in which the dashboard can improve efficiency and therefore enable people to have a “much easier journey”.
He said one of the main things members want to know about their pension pots is how much is in them and where they are, but emphasised that giving people data about their pensions is only one part of helping them.
Heath-Lay said there has to be a free-to-use service such as Pension Wise, which schemes can direct members to, as “people looking at this data have then got to make a decision” so “they’ve got to have access to the right product [and] the right support”.
