Warburtons spells out the ABC of pension freedoms

The introduction of freedom and choice means schemes have to multiply their communication efforts to ensure members understand their choices when they retire.

A panel of industry representatives at the NAPF Annual Conference 2015, held last week in Manchester, said simpler language, well-designed visuals and personalised guidance play an important part in this communication drive.

Nicki Mortimer, client director at professional trustee company Capital Cranfield Trustees, noted that communication initiatives would have to start at zero.

“As an industry we have fundamentally overestimated the knowledge of people," she said. "We have to assume that they know nothing.”

There’s nothing worse than going into a room talking about perhaps a subject that you may not be all that interested in and it’s death by Powerpoint

Anne Hunt, Warburtons

While this might be the reason auto-enrolment – which relies on workers' inertia – was originally introduced, it does not fundamentally change this lack of engagement.

Alex Roy, who oversees pensions and investments at the Financial Conduct Authority, pointed to the inherent paradox that lies in the co-existence of auto-enrolment and freedom and choice.

“Auto-enrolment effectively disengages the consumer upfront,” he said. “That puts a lot more onus on pension professionals to then re-engage consumers during the lifetime of their saving.”

According to Roy, such engagement should be taking place long before retirement: “If they get to that point when they’re about to retire, having never thought about it, that is just too late. There is a process of education that needs to take place much earlier.”

Who can they ask?

Pension Wise is one service giving information and guidance, if only at the point of retirement. Its deputy director Jamey Johnson said Pension Wise alone has delivered over 20,000 appointments.

But he noted that there were no figures to say how many people in total have accessed different forms of guidance and advice from different sources.

Employers could be one such source, according to Peter Shellswell, director at First Actuarial, who said employees are looking to their companies for help.

“I’m always struck when I talk to people,” he said. “Their employment history is their pensions history, and actually people do put a good deal of trust in their employers.”

He added that although the vast majority of members do not want to actively deal with the investment side of their pot, they should be kept up to date.

“We do owe it to them to tell them what it is they’re invested in, why they’re investing in it, and some of the decisions that lie ahead. Employers are best placed to do that.”

Child’s play

One employer doing just that is bakery company Warburtons. Its pensions and risk benefits manager Anne Hunt said the scheme’s ‘road map’ communications initiative is currently being extended to include retirement choices.

Employees receive a booklet explaining the available options in simple terms. “We’ve gone for a simple ABC: A for annuity; B for ‘bit by bit’, which is the drawdown; and C for cash,” Hunt explained.

The employees are also taken through a presentation as well as interactive sessions. The latter include a video of three children revealing their plans for the contents of their respective piggy bank, exemplifying the three options.

“There’s nothing worse than going into a room talking about perhaps a subject that you may not be all that interested in and it’s death by Powerpoint,” said Hunt.

“It’s very much about those visuals, take out the words, simplify everything, and make the messages very clear and easy to understand.”