Written by Kin Ly
Kin Ly explains how the widespread pension reforms across Europe make it the right time to focus on improving pension communication, using a multi-faceted approach
The pensions industry has received increased attention over recent years with European regulatory changes taking the public by storm: the shake-up to the state pensions for instance; or the enforcement of the EU gender directive affecting annuity rates. Indeed, the hefty reforms have brought to light the importance of clear communication to ensure that the changes and their impact are accurately understood; and there’s no doubt that some of that burden lies with employers and pension providers.
However, some European countries appear more ahead of the game than others when it comes to pensions communication. The UK’s Jargon Free Pensions resource brand founder Steve Bee says: “I don’t think we’ve got a good track record in this country of communicating pensions in the workplace. So if you’re looking at the new pensions market, assessing what has been done in the past is not a particularly good guide of what to do in the future.
“Surveys in the last few years of large employers in the current corporate market found that very few people know about their pensions. They do not know how much their employer pays, they are not sure what they are likely to get. I think in terms of communication we have done a poor job up until now. But we are now spreading that corporate pensions market from the large firms right down to the tiniest. So if we’re ever going to get the communication right, it’s got to be now.”
What needs to be done?
Reforms and new initiatives may well present an opportunity to ‘get the communication right’, and if this is the case, then employers may need to look at a two to three-tiered approach to communication, say some of the UK’s leading pensions consultants.
Spence & Partners head of employer advisory services Alan Collins is currently working with small and medium-sized (SME) employers who are participating in the country’s automatic enrolment initiative. Some of his clients are reviewing their existing pension arrangements and are preparing for consultation with staff.
He says a two-tiered communications strategy would be the most effective way of engaging employees. The first phase would involve an open consultation in the form of an online or paper-based questionnaire, followed by a second phase where employees are offered face-to-face consultations.
“What employers are trying to do in the first phase is gather information so that they can best inform the decision for what to consult on next.
“The message has to be clear that it’s a genuine consultation and not just a tick-box exercise. It should demonstrate that [employers] want to find out what their employees want.”
While this may be a beneficial two-way process in identifying the needs of staff, there are still logistical barriers for some employers to overcome. According to Collins, most of his SME clients may not have the confidence to roll out an online survey despite the benefits to increasing engagement and gathering information.
He says an online tool is a resource that Spence & Partners anticipate looking at over the next 12 months, but that the feedback from its clients is that they are very much ‘still on paper’. However, Collins adds: “I will certainly be discussing with some clients whether an [online survey] is something that they want to do. I would anticipate that response rates would increase the easier you make it for employees to respond. If you can generate that through online tools then I would encourage people to look at that.”
The second phase – the face-to-face consultation – is an additional opportunity to present the results of tier one’s questionnaire and outline the company’s next steps. However, it is important to demonstrate that the feedback from the questionnaire has helped shape the company’s proposals, says Collins. “This is an ideal opportunity to start the final part of the consultation on a positive footing. It should demonstrate that the initial phase has contributed to the formation of the employer’s plan and it should show how they are able to meet the needs of their staff. This could really help cement the success of the second phase.”
While a two-tiered approach provides double the opportunity to engage and communicate with staff, Bee suggests that there is room for a third tier in the use of online social media.
Similar to Collins, Bee describes a strategy that encompasses a face-to-face open forum but suggests that this should be followed by the use of middleware programmes that will ensure ongoing communi-cation between employer and employee. The third tier – such as Twitter, LinkedIn or Facebook – are additional platforms to further engage members of staff, and together constitutes an action plan for ongoing communication.
However, the uptake of social media among the pensions industry appears limited, says Bee. “I think our industry is frightened to use Twitter and LinkedIn. You’ll hear a lot of people say, ‘I’d like to do that but we’re not allowed to do that at work.’ I think that’s limiting.
“Let’s wind back to the 1930s when the telephone became available – not allowing your employees to use the telephone would not be far-sighted. The limitation on the use of social media is not any different to that. I think it would put your business offside.”
The industry may need further convincing where social media is concerned, but what seems to work well for some is the use of explanatory online videos. B&CE director of customer solutions Jamie Fiveash says the use of videos is an effective alternative to face-to-face consultation.
The organisation has devised a five-minute online video aimed at employers to explain the benefits of its pension solutions. While there are no concrete figures to indicate whether engagement levels have increased, Fiveash says the feedback so far has been positive. “The most effective means of communication is face-to-face, but that’s not always feasible in terms of cost, especially for transient workers placed across the country on different building sites. What we use is a more effective mobile means of communication in the form of DVDs and videos that could be streamed. Simple messages tend to be the most effective – people don’t tend to read very lengthy letters in a post.”
Central pensions database
In some European countries, a central database is being used that provides savers access to details of all pension pots, including a break-down of contributions and charges. For instance, in the Netherlands, users are able to log in to a database using their national insurance (NI) number to access this information.
Fiveash says a system like this would increase engagement among pension savers. “It makes your pensions and pensions schemes self auditing and more transparent. I admit, I don’t engage with my pensions, but if I knew that I could type in my NI number and can see my last three pensions in one place, I’ll do that.
“The beauty of a central register is that you don’t loose touch of your pension scheme when you move from employer to employer. It would help to have a central log-in system rather than having to sign into different accounts for every single pension provider.”
There is no doubt that many will be affected by a raft of pension reforms and while there are examples of good practice to draw from some European countries, it is clear that from business to business, communication is patchy. But as Bee advocates, the pensions industry has the opportunity right now “to get the communication right”.