Editorial: As communication specialists propose showing the decisions of other scheme members to engage their peers, some pension funds have started doing precisely that.
Members of the Ernst & Young defined contribution scheme (which will feature in next week's DC Investment Specialist supplement) can read about ‘Anna’, one of their peers who is brave enough to share how much is in her pension pot, what her entitlements and transfer values are. She also explains what she has ultimately decided to do based on this information and her needs.
And the Unilever pension scheme has now set up an online tool called ‘People Like U’ to help individuals find an example member in similar circumstances and present “some of the practical steps they might take to plan their benefits”.
But the question arises, as it so often does, whether this could be interpreted as more than just guidance – whether someone could feel they are receiving advice.
Although the ‘example member’ is not directly aimed to engage anyone in particular, it arguably is tailored to members in specific circumstances.
If I am told by my pension scheme’s trustees that a person in circumstances comparable to mine has done X, does this mean I’m told it would be good for me to do the same? As there are no two life situations that overlap in every detail, I would be unlikely to come to the conclusion that I'm told what I should do, but would others feel the same?
A clarification about when guidance starts to become advice would, as most in the industry seem to agree, be helpful. The Financial Advice Market Review proposes bringing the definition in line with that in the European Union’s Markets in Financial Instruments directive, which defines it as a 'personal recommendation'.
Until we are given more clarity, pension schemes will continue to have to find their way in the fog of the current definition, meaning they often only take tiny steps towards stronger guidance, for fear of accidentally landing in advice territory.
Sandra Wolf is editor at Pensions Expert. You can follow her on Twitter@SandraCWKand the team @pensions_expert.
