Effective member communications
Our Trustee toolkit provides more information on the importance of effective communication.
Contents of this page
- Key points
- About our approach
- The importance of effective member communications
- What makes member communications effective?
- Following good practice
- Key areas
In DC schemes, many of the important decisions which affect members' benefits are made by the members themselves.
If members have a lack of understanding of their pension arrangements they may well make poor decisions or take no action at all.
These guidelines set out principles of good practice and provide examples to help trustees, managers and employers to consider what they are trying to achieve and determine whether their written communications are successful.
The principles we describe may be useful for anyone involved in producing member communications, including pension scheme providers, advisers and administrators.
About our approach
Our research shows that member communications vary greatly in their effectiveness. By providing these good practice guidelines and examples we hope to help some schemes to evaluate their communications and find ways to improve their effectiveness. This can often be achieved without incurring increased costs.
These pages do not describe the legal requirements – these are set out in the disclosure regulations (Occupational Pension Schemes (Disclosure of information) Regulations 1996 and the Personal Pension Schemes (Disclosure of information) Regulations 1987) which set out the minimum information which a member must receive. The regulator would expect every scheme to comply with these requirements. Providers of contract-based schemes must also comply with requirements of the Financial Services Authority's (FSA) rules.
We have worked together with the FSA in producing these pages.
The importance of effective member communications
If members don't understand their pension scheme then they may not appreciate its value or realise how it can help them to save for retirement. As a result they may not benefit from their scheme as much as they should.
Trustees or managers and employers have a shared interest in seeing that:
- members are engaged and motivated to plan for their eventual retirement and do not become confused and discouraged;
- the scheme is effective in attracting, motivating and retaining employees;
- unnecessary time and resources are not taken up by ineffective or badly planned communications exercises; and
- the requirements of legislation are complied with.
These benefits are unlikely to be achieved unless the scheme is clearly communicated to the employees.
What makes member communications effective?
Effective communications will have impact, clarity and accuracy.
- Impact – to get the members' attention
- Clarity – so the members are able to understand it
- Accuracy – so members receive full and reliable information
These qualities all work together; a communication that is clear and accurate but makes no impact may not have the desired effect, and a communication that makes an impact and is clear, but is inaccurate, may be misleading.
Trustees of occupational pension schemes should refer to our Trustee toolkit which sets out many of the principles of effective communication. If schemes have access to communications experts they may want to make use of that expertise.
Trustees should also be prepared to challenge their advisers or providers of group personal pensions if it appears that a communication may not achieve what it sets out to do.
Following good practice
- Identify your objectives, and have a clear communications plan
- Identify the best ways to communicate
- Tailor communications to the audience
- Remember the needs of all groups, not just active members
- Be open and honest
- Avoid jargon
- Choose a good time and try to get members to engage
Communications should be made with a clear plan in mind and everyone involved in a communications exercise should understand its objectives.
When deciding whether to publish a communication, try to gauge the reaction of those receiving it, to determine whether it will achieve its objectives. This is particularly important if a difficult message is involved, in which case the communication should give the members confidence to make any necessary decisions.
You can sometimes anticipate members' reactions by carrying out 'consumer testing' among a limited cross-section of the intended recipients.
If possible, try to assess the members' reactions to the communications after the event and evaluate whether the communications objectives have been achieved so that lessons for the future can be learned.
Consider the advantages of various forms of communication when setting out to communicate with members.
Effective communication does not have to be elaborate, glossy or costly. A simple poster or one-page hand-out, if it makes the point well, may be all that is needed for some situations; other changes may benefit from a sustained communications campaign.
There are many alternatives available, and experience should suggest which methods are likely to be most successful for a particular workforce. Sometimes it may be helpful to use more than one channel of communication, or to repeat the message at suitable intervals. It is often better to deliver complex messages in bite-sized pieces.
Some messages may be best conveyed face-to-face or by direct communication whereas others can be adequately covered by a notice on a staff notice-board. Email can be a very effective form of communication if it is in common use throughout an organisation and available to all members. However, where email is used, it is important to remember the need to keep the communication for future reference.
Even when face-to-face communication is possible, many members like the additional security of receiving information in writing.
When deciding the best way to communicate your message to members, the following are among the factors you might want to consider:
- the length of the subject-matter;
- the degree of urgency; and
- the need for an individual response.
Communications of any sort are most effective if they are closely based on a good understanding of the members receiving them.
Very technically complex communications can be daunting. If the majority of the workforce of an organisation is not used to dealing with financial matters a very simple and direct approach to communication will be needed. A large bulk of technical text might put members off considering decisions that could have a serious impact on their benefits in the long term.
Where it is necessary to deal with technical matters, simple explanations should be provided if at all possible.
The employer (and the trustees, if any) should know the workforce and be aware of:
- their needs;
- their levels of financial awareness;
- their access to technology; and
- any disabilities or impairments.
Some members may benefit from alternative forms of communication or special arrangements.
Sometimes, the same message will be relevant to different groups:
- active members;
- members who have changed employers;
- deferred members; and
However, this will not always be the case, and different groups may be affected in different ways or may be most receptive to different forms of communication.
Ideally, target your communications to the groups they affect. However, some communications which are widely circulated will contain a note that a group (such as pensioners or deferred members) are not affected. Where this is the case, these notes should be carefully worded to avoid any group feeling 'cut out 'of the process.
Maintaining contact with deferred members and pensioners is more than just a good publicity exercise – it will smooth the administration process for the future. A newsletter can be a good way of achieving this.
Communications should always be fair, clear and not misleading. They should be factually accurate, and should be set out clearly so that members can readily understand them.
Communications should be balanced to present a fair view of the facts (particularly important where changes are being introduced), and should convey relevant information. Aim to cover any detail legally required, but avoid covering every possible situation, however remote, with the result that the communication becomes overly long and complex.
The subject of pensions is one which readily lends itself to technical terms, but these may well mean little to anyone not closely associated with the pensions industry.
Jargon, specialist terms and acronyms are best avoided where possible; if they are absolutely necessary explain them clearly in terms the reader will understand.
Where there is a choice about the timing of a communication, it makes sense to choose a time when the members are likely to be receptive. Also, try to avoid overburdening members with too many communications in a short time.
Our research shows that if it is possible to engage with the members and make the communication a two-way process, this is likely to generate higher levels of interest than if the communication makes no provision for feedback.
It is important that all communications to members should be produced to a consistently high standard. However, there are key areas that are critical to members' decision taking and which may also present a particular challenge to those charged with the task of communicating. As we cannot cover every aspect of member communications, this guidance is focused on four key areas.
At or prior to the time of joining the scheme
Early communications should aim to spark the members' active interest. Members will need information about the decisions they will be required to take, including communication about choice of funds (including charges and their effects on members' funds) and the risks and rewards of a DC scheme compared to other forms of saving.
If a scheme is introducing a new DC section into a DB scheme, it may be advantageous to make comparison to the relationship between risk and reward under the two types of scheme.
Members may also need assistance in dealing with the complexity and volume of information available on joining a scheme (see Examples).
Member approaching retirement
Whether or not members are given pre-retirement counselling face to face (either individually or on a pre-retirement course) effective written communications can help improve member understanding. Members would need timely information about the open market option and support to enable them to decide on the annuity 'shape' that would best suit them, and on other retirement income products available (see Examples).
Times of change
Changes in scheme design, changes to the funds the member can invest in, or even the change from DB to DC (or vice versa) all present a challenge, to trustees, scheme managers and provides, and to the members' understanding. Certain changes require the employer to consult with the members, under the terms of the Employer Consultation regulations. In any event, members would require sufficient information to understand the changes being made, the effect on their benefits and contributions and what the changes require from them (see Examples).
Ad hoc communications through notices, the intranet etc
It is easy to overlook the importance of ongoing member communications, but often these are the only communications that members, especially deferred members, will receive from the scheme.
Trustees, scheme managers, providers and employers use a variety of media to maintain contact with members and convey messages that may provide support as needed, from time to time. They can include reminders to active members to review fund choices and levels of contributions, and can encourage deferred members to remain in touch and provide schemes with updated details of addresses and marital status if these change.