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Communicating to members during COVID-19

It is important that your scheme members avoid making hasty decisions, which they later come to regret. As someone involved in communicating about pensions you can help by urging them not to rush decisions and providing them with clear, relevant and timely information so they can make informed decisions.

This guidance is aimed primarily at trustees, but since communications are often prepared by scheme administrators (or a pensions manager in the case of public service pension schemes) we would expect administrators and managers to also follow this guidance.

This guidance does not supersede trustees’ fiduciary duties, their obligations under the scheme rules, or the law, and we recognise that trustees may tailor their approach for their situation and members.

Published: 29 April 2020.

Guiding principles

These are worrying times for pension scheme members and you should tell them about the steps you are taking to continue running the scheme. It’s important that members can continue to access member services and contact the scheme if they have queries. The channels used (eg telephone, email and webchats etc) should be accessible and reflect members’ needs.

Where there are any changes, delays or a disruption to member services, you should keep them informed – for example, via notices on the scheme’s website, acknowledgment replies to emails or recorded messages on call centre numbers and, if considered necessary to reach certain members, posting communications. You should look to provide the following types of information:

  • The types of member services impacted, including the reasons for any change, delay or disruption.
  • The steps being taken to restore normal services, including timescales.
  • Whether there are temporary changes to service levels for processing member requests and what these timescales are (for example processing cash equivalent transfer values (CETV) from defined benefit (DB) schemes – see also COVID guidance on DB funding).
  • In the case of delays to annual publications and/or member communications (such as annual benefit statements), a timescale of when you expect these to be published or issued (see also our approach for dealing with breaches due to COVID-19).

Communicating with members when they request a transfer or to access benefits

Scheme members might consider transferring their pension due to the current financial uncertainty around investments, or to access their funds by retiring from the scheme when they wouldn’t otherwise have done so. This is a critical moment for them. They are irreversible actions that will have a lasting impact on the member’s retirement benefits.

You should be alert to the risks and support members to make an informed decision in the following ways:

Specific guidance on DB to DC transfers

This guidance is in addition to the steps set out in the preceding section.

Transferring out of a DB pension scheme into a different type of pension arrangement is unlikely to be in the member’s best long-term interests. A DB scheme promises a pre-determined level of benefits that is underwritten by an employer, usually with an additional layer of protection offered by the Pension Protection Fund.

For the foreseeable future, please make sure you issue this letter template (PDF, 2 pages, 171kb) to all members requesting a CETV quote. It contains important information on points the members should consider before making a decision and where they should go for impartial guidance. It was prepared jointly by TPR, the FCA, and the Pensions Advisory Service.

You should actively monitor the number of requests for CETV quotes you receive and which advisers are supporting the members’ request. If you identify unusual or concerning patterns, such as spikes in CETV requests or the same adviser across a multitude of requests, please contact the FCA on DBTransferSchemeInformation@fca.org.uk.

Where a DB transfer value is more than £30,000 and members want to transfer benefits to a DC scheme, they are required by law to take advice from a financial adviser firm who is authorised to advise on transfers by the FCA.

You should refer to our DB to DC transfer guidance on the communications you need to give members when managing DB transfer requests.

Stopping contributions and ceasing membership

Uncertainty around employment and disruption to household income due to COVID-19 might lead some members to think about stopping pension contributions and cease membership in the scheme.

Where members request to cease membership, you should make them aware that they:

As the COVID-19 pandemic is brought under control, you may want to contact members who have left the scheme and remind them of any rights they may have to opt-in or re-join the pension scheme. See also automatic enrolment and DC pension contributions: COVID-19 guidance for employers.

Pension scams

The impact of the pandemic on markets and personal finances may make members more vulnerable to scams.

Trustees are the first line of defence in protecting savers and have a key role to play in ensuring savers make informed choices.

You should:

DC investments and market volatility

Pensions remain a safe long-term investment for retirement. However, falls in the market and individual fund values may:

  • cause some members to switch their investments and crystallise current market losses
  • discourage members from saving and may encourage opt-outs
  • make some members more susceptible to scams promising better returns (see Scams section above)

Members will clearly be concerned and if you intend to contact them over the next few months – for example sending them annual benefit statements or statutory money purchase illustrations – you should highlight:

  • What current market volatility might mean to members retiring over different future time periods.
  • The need to think carefully and consider getting investment advice before switching funds in the current market (to avoid crystallising losses).
  • The danger of scam activity in the current climate.
  • Free impartial guidance available from the Pensions Advisory Service.