We are entering a time in the history of UK pensions where member engagement is set to dramatically increase. Pensions Dashboards will tell members what pensions they have and where they are, all in one place. Consolidation of small pots may start to move pensions between providers, with members being given the option to opt out. If a lifetime provider scenario comes into play, the member will be given choices to make.
Whilst the timeline or likelihood of some of these situations arising are not entirely clear, we can be certain dashboards are just around the corner and it is likely small pot consolidation will become reality.
These are arguably all good things and in the interests of members, but it is inevitable that they will generate a quest for knowledge. Viewing your pensions on a dashboard is not the endgame. It is the beginning of a whole new set of member behaviours, around what to do next. Consolidation will prompt members to decide if consolidation is a good thing.
With so little financial education available and so many constraints around giving advice set against various duties to ensure member understanding, it is likely we will see a large increase in the demand for knowledge and a dilemma of how to meet that demand. That demand is probably going to land at the door of already overstretched pensions administrators.
What does that mean in practice? And where does the boundary lie between providing information and imparting financial advice? How can we, as an industry, ensure that members have the appropriate knowledge to make informed decisions, without seemingly making those decisions for them.
Online member portals, advances in AI powered video and digital communications are all tools that a forward-thinking administrator can harness to help manage increased requests for help from members. Member education and engagement needs to be tackled head on with creativity and the use of modern technology combined with good communications, to overcome the apathy and inertia that seems to be the accepted norm when it comes to pension-related decision making.
For example, recent research carried out by the Social Market Foundation and Cushon[1] revealed that around 75% of survey respondents would like to choose their own occupational pension provider/ fund. However, only 28% said they would actually exercise that choice if it was available.
While lack of engagement is not always unwelcome; indeed, the success of auto-enrolment almost depends on it – it can make the job of administering a scheme much more challenging. Typical communications challenges include:
While digital forms of communication offer many advantages, cost-saving being not the least of them, some members prefer to receive paper-based information, and this should be accommodated to avoid inadvertent discrimination against vulnerable customers. The research backs this up - 76% of people want the right to choose how they receive their communications - printed or digital[2].
However, one other aspect of the digital v’s paper-based riddle is the increasing awareness of environmental impact, with schemes in the private sector already being subject to climate-related reporting requirements.
Ensuring a member’s preferences are met should, in theory, go a long way to ensuring important information is not just shared, but seen. Making sure that information is absorbed and understood? Well, that’s another challenge…
Many pensions communications invoke the dreaded acronym, Too Long Didn’t Read (TLDR). A member is likely to switch off way before the decision-making stage if they must wade through numerous pages of text, peppered with jargon. Schemes must consider how to get the key points across quickly and accurately, with further information clearly signposted.
A recent initiative between the National Police Chiefs’ Council and Clay 10 Creative has produced a new design of annual benefit statement to comply with legislation relating to the public sector pensions remedy – with key information shown on the first two pages and detail broken down in subsequent sections, and ample hyperlinks to supporting information.
There are legal challenges too. Another acronym that all schemes are familiar with is General Data Protection Regulation (GDPR). Whichever means and method of communication are decided upon, schemes have a statutory duty to protect an individual’s data and should not issue personal information to an address – whether postal or email – if there is any probability that it is no longer correct.
Data cleansing and mortality screening exercises may help keep data current if there is an existing lack of member engagement. Data cleansing using third-party datasets can improve data quality without member contact.
Many providers may have a dedicated team of colleagues dealing with member enquiries, be that a contact centre for receiving phone calls or a post and scanning team. How can organisations ensure that those teams are adequately resourced for key contact points, such as benefit statement or pension saving statement season, while not being over-resourced for the rest of the scheme year? This will be a particular consideration when we reach the yet-to-be-confirmed Dashboards Available Point (DAP). With 16m people forecast to use pensions dashboards, should members not be able to locate their pension with you there’s a high probability that they’ll contact you to query why. Ensuring data accuracy should be a priority for schemes to help combat resource issues down the line.
While larger schemes in the private sector may have larger budgets to spend on the latest innovations in technology to support digital communications campaigns or buying in professional consultancy services, small schemes and those in the public sector may not have the same financial luxury. They will therefore need to employ more imaginative means to reach their target audience. One alternative could be to access the free collateral provided by the lovely folk at Quietroom Communications templates - Quietroom.
There is always a fine line between an administrator’s desire to be helpful and overstepping the mark into unregulated financial advice. The following guide from the Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) may help to clarify the boundaries of advice v’s guidance: Guide for Employers and Trustees on providing support with financial matters without needing to be subject to regulation (fca.org.uk)
In summary, the first objective in meeting any communications challenge is ensuring the right message gets to the right person in the right format at the right time.
The second, and equally important, is ensuring that the message can be easily understood, and that the member has enough information to make whatever decision is required, in their best interests, and how they can access further help or guidance where necessary.
How those objectives are achieved is a matter for each scheme to determine – making use of available resources from organisations such as TPR (Communicating reporting DC pension schemes | The Pensions Regulator) and the Money and Pensions Service (maps.org.uk).
Got any other tips – feel free to share them with us!
[1] Up-for-grabs-April-2024.pdf (smf.co.uk)
[2] https://dma.org.uk/article/which-is-best-digital-or-print-communications