Hands that do dishes

06 April 2016

As a phenomenon, Big Data has really just started to grab people’s attention within the pension’s world, but as a concept in the world of marketing it’s been around for years. So what do your preferences for a particular ice cream, washing up liquid or even your holiday destination have to do with pensions? In our recent Pension Scheme Insight survey, pension managers and trustees placed great importance on improving member education and engagement and this was the second most popular challenge for the coming year, as cited by 42.7% respondents. When we talk about engaging with members this goes beyond simply sending them nicely worded newsletter, we also look at who they are as individuals by taking a data-led approach.

This has particular relevance for the New Minimum Governance Standards imposed by the Department for Work & Pensions (DWP). For the first time, trustees must make sure that their ‘products’ are designed with the end users – their members – in mind. There is a constant reminder that they have to do this. The Pensions Regulator’s expectation that trustees must be able to demonstrate whether – and how - the scheme offers ‘value for money’ and delivers ‘good member outcomes’ coupled with the FCA’s requirement to listen to the ‘voice of the member’ will surely keep this at the front of trustees’ minds? Perhaps…

There are many regulations and decisions competing for trustees’ attention, and it’s easy for a nebulous concept like ‘good member outcomes’- that it is difficult to quantify - to be put aside in favour of hard financials and investments. ‘Value for money’ at first looks like it belongs to this world, but it is a less promising candidate than it appears. It can be really difficult to calculate the value to a member of an informative website, a well trained admin team or a clear and comprehensive benefit statement, and both phrases are in danger of meaning very little. As for listening to the ‘voice of the member’, are research and data analytics really worth it? Surely trustees are the experts; they know what a good scheme looks like and how best to communicate it to members?

Luckily many trustees have recognised that they need to do things differently. Some are starting to look closely at their membership demographics and behaviours, and segmenting communications to make them more relevant. They’re seeking feedback from members, and taking their needs and desires into account when making investment changes or building an engagement strategy.

And more and more trustees are searching for ways in which they can quantify good member outcomes and demonstrate value for money. Target Outcome Planning can help define good outcomes, giving trustees concrete benchmarks that they can target. Focusing on what they will get out of the pension scheme, rather than what they have to save, will also help engage members. This is where effective communications come in. It is much easier to motivate a member to make decisions about their retirement savings if you can help them visualise what they might get if they saved more, worked for an extra few years, or chose a different investment approach. Members, like trustees, are far more likely to respond to imagery, numbers and facts, than they are to vague appeals to save for their retirement.

Trustees need to support members by offering education and information, providing a feedback loop and measuring engagement. But not all members are the same. Capita’s Member Analysis and Segmentation Tool (MAST) can help trustees get to know their membership in greater detail, including, crucially, their likelihood to engage and their propensity to save. With this knowledge we can create an effective scheme design and communications strategy that complement one another, and are tailored specifically to the membership of the scheme.

By ensuring that they know their members, trustees can design schemes and communicate with members in a targeted, relevant way; a way that they can feel confident will have an impact on those that they are designed for.

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