A communications roadmap for Master Trusts
The accelerating and seemingly unstoppable shift towards Master Trusts in the DC market has been well documented in recent years. I have been fortunate to be heavily involved in this since 2014, when we started the process of devising a member engagement and communications strategy for the Atlas Master Trust – a multiemployer DC scheme founded and backed by Capita Employee Benefits. What we found was a rapidly evolving market which sits in the centre of many different challenges across the DC pensions industry.
Master Trusts are often comprised of many unconnected Participating Employers, so communications need to find a style and tone of voice that transcends the full spectrum of employee demographics. Complex terminology and member choices need to be expressed in terms that a true ‘mass market’ can relate to. This itself presented a fantastic opportunity to start with a blank sheet of paper and cast aside some of the tired conventions that are often left over from old single-employer trust schemes.
So if I was an employer starting out on the process to participate in a Master Trust, what would I be looking for and how could I be sure that my smart new company pension vehicle wasn’t actually full of recycled parts?
Arguably the most important choice that members will have to make is how much responsibility they want to take for managing their investments. Once the key is in the ignition, what sort of traveler will they be?
Many will inevitably enter the default fund, whether by choice or simply by never making an active investment decision. They are our ‘Passengers’.
At the other end of the spectrum, members may wish to manage their investments themselves, selecting their own portfolio from the Master Trust’s range of available funds. These people are our ‘Drivers’.
But what about those who fall between the two? Keen to engage with their savings, but unable or unwilling to select their own funds. Should we simply group these members with the Passengers, or could we instead design an adaptable investment strategy with powerful engagement tools to create a series of simple decisions for these members as they move through their different life stages? These people are our ‘Map Readers’, and their needs are just as important as our Passengers and Drivers.
Retirement – or the open road
One reason for the recent popularity of Master Trusts has been the need for trustees to find a solution to offering the new flexibilities that came into effect in April. Trustees want to make sure their members can access the flexibilities, but are wary of taking on the extra cost and governance burden in their own scheme. For many, the possibility of partnering with a Master Trust to signpost members to a ‘trusted’ provider has been very appealing.
It’s likely that the Master Trust membership will have read a lot about pension flexibilities in the national press recently, but imagine the look of confusion when members come to open their Retirement Options pack and find no reference to their pension as a cashpoint or as a Lamborghini, but instead a choice between an ‘UFPLS’ or a ‘FAD’, with some ‘PCLS’. There is a real opportunity for engaging employee communications here that don’t just work at ‘retirement’, but throughout the many years of drawdown that may follow. Retirement does not have to be a one-off transaction anymore and that should be embraced! They’re on the open road now and need effective guidance long after the traditional point of handing their hard-earned savings pot over to an annuity provider.
So if I was an employer starting the process to participate in a Master Trust here’s what I’d be looking for. Yes, I’d look for the comfort that the Pensions Quality Mark and the Master Trust Assurance Framework gives around
communications, but they should not be the true differentiator. I’d look for an engaging multi-channel communications programme that my employees could relate to. I’d ask the management team of the Master Trust how they measure employee engagement – what metrics they use. And most importantly, I’d ask how they use communications to reach all of their members, and make sure that the Map Readers don’t lose their way.
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