Pensions managers at two leading UK employers have called on schemes to communicate with their members well in advance of their retirement age, as schemes react to the government's guidance guarantee.
Speaking at Pensions Expert's inaugural Leadership of DC Pensions conference yesterday, pensions experts said that while the detail of the government plans had yet to be published, early and continual engagement was key to securing good member outcomes.
You’ve got to start in the early fifties, if not before
Dermot Courtier, Kingfisher
Dermot Courtier, head of group pensions for home improvement retailer Kingfisher, said: “From our perspective the principle is to communicate early... You’ve got to start in the early fifties, if not before.”
Courtier also stressed the importance of ongoing guidance for members beyond retirement. “Things should go on post-retirement, because a lot of people could have 20 years in retirement," he said.
Kingfisher begins communicating with scheme members about their retirement from around age 50. The scheme is also reviewing the communication materials it uses, to emphasise the wider range of options available since the Budget, Courtier told delegates.
Along with engaging early, panellists discussed the benefit of tailoring communications to make them understandable and actionable for their members. This could involve segmenting the membership to identify their differing objectives.
“We think that segmentation is a really important tool that we can take advantage of,” said Lesley Alexander, outgoing chief executive of HSBC Bank Pension Trust. “With the new disclosure requirements we should all be communicating much more early.”
She recommended schemes begin communicating with their members at the start of their decumulation phase to remind them which investment option they are in and what will happen in the future.
Tailoring the message
Kingfisher used a series of characters known as ‘the Bolt family’ to communicate auto-enrolment to its members. Each character represented a different role or member profile such as HR manager or an employee eligible for auto-enrolment.
The pensions team produced a series of DVDs, presentations and learning modules to target the fundamental points of pensions and retirement saving.
Karen Heath, chief engagement officer at communication consultancy AHC, said the use of characters was an effective way to driving engagement among scheme members. She added video can be well-suited for communicating with younger employees.
However, she said the need to engage with members is ongoing if schemes are to make sure members make adequate contributions to ensure a comfortable retirement.
“There’s a real danger that at the minimum contributions level people think that their pensions box is now ticked and it really isn’t,” said Heath. “There’s a lot more work to do through communication and engagement with members.”
Early engagement may be more important in light of the forthcoming guidance guarantee, delegates heard, as investment strategy is informed by the choices the member is expected to make at retirement.
“To my mind the guidance guarantee needs to happen when someone’s in their fifties,” said Martin Thompson, director at benefits consultancy Premier.
“If it happens when they’re in their sixties they’ll be in the wrong investment strategy and those things are completely interlinked,” he said. “Up until now most scheme members haven’t had to think about investment strategy, they’ve gone into a default… and at the end of the day they’ve bought an annuity.”
