Once upon a time
Once upon a time, communicating with members of a pension scheme meant providing information. After all, once you joined, that was it; everything was done for you. You paid your money in, it went off somewhere for someone to do something with, and it came back to you as a monthly pension when you retired. You might get some tax-free cash as well. There wasn’t really all that much to tell you, and even less for you to do.
But that was back in the heady far-off days of final salary pensions, when engagement meant a whopping diamond, and mobile phones were the size of a loaf of bread. Communications Before Defined Contribution (BDC) were about providing barely-needed, seldom-referenced information to indifferent members.
Now we live in an After Defined Contribution (ADC) world, and shiny new defined contribution (DC) schemes have cut a swathe through trusted old defined benefit (DB) funds. Some members were unceremoniously tipped out of their DB schemes as they became unsustainable and closed; others chose to leave, enticed away by promises of fewer restrictions and unrivalled investment performance. The occasional career average revalued earnings (CARE) or exotic cash balance arrangement stood out in a sea of DC schemes (and boy can they be tricky to explain).
Now members were in DC schemes, they had decisions to make. “How much should I contribute?” “When do I want to retire?” Communication was certainly needed now, but members remained largely indifferent. This wasn’t how it had worked before. Members could also choose how to invest their pension savings. Most didn’t, obviously. Investment is scary and best left to the experts, right? After all, that’s how it always used to be, in the good old BDC days. That’s what they’d always been told. Carefully crafted investment guides were filed away, or left to gather dust in HR cupboards.
Next came automatic enrolment, placing more and more people into pension schemes. Some left and some stayed; the statistics are available – working out how many thought long and hard before making their decision is harder.
Which brings us to the present day, and 2015’s crop of new pension freedoms. Even more choice for members coming up to retirement, many of whom can still dimly remember the way things used to be. Members not yet accustomed to the choices they already had, let alone any new ones. Thankfully, communications teams, along with the Pensions Regulator and more progressive employers, trustees and providers, realised that people needed guidance and support.
Meeting Disclosure Regulations wasn’t enough. Pushing out information wasn’t enough. Having a good admin system wasn’t enough. Having a robust investment strategy wasn’t enough. Delivering projects on time and to budget wasn’t enough.
If people are to take responsibility for saving for later life, they need to really understand the choices they have, and the impact their choices could have on their future. People need to be encouraged to care about tomorrow, as well as today.
Other things have changed in life ADC. A pension is now just part of a broader reward package for many people. Some also have to choose from an array of flexible benefits, or decide whether to participate in the company share plan. There’s only so much cash to go around.
Communication has been eclipsed by ‘engagement’ as members need to take a holistic view of their benefits. But what is ‘engagement’ and how can it be achieved? The dictionary definition is ‘the action of engaging or being engaged’. Very helpful.
But if you consider the synonyms associated with the word engagement, it makes more sense: taking part, sharing, involvement. It needs to be a two-way street.
We can’t go back to the old days of pushing out blanket communications. Thankfully, living in a digital world means it’s easy to make communications highly relevant and personalised; members can get involved, work it out for themselves (with support and guidance from the experts too) and take control of their retirement savings.
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