Pointing trustees in the right direction
They say that everyone is an expert on something. That means there are significantly more topics about which we are not experts.
The key is to know who the experts are, and where you can find them. For example, what do you do if you need directions? - you ask a passer by, or more likely, use the sat nav on your phone. The people and tools are readily available and we automatically know where to go to get help. You wouldn’t call a friend who has no knowledge of a location to point you in the right direction.
“Read the directions and directly you will be directed in the right direction”.
Decisions about your savings are no different. It needs to be clear who you can contact and where you can get further information. This applies both to members and to the trustees providing the guidance.
Caroline Rookes (former CEO of the Money Advice Service), recently completed an independent review of the communications and support given to British Steel workers in relation to the restructuring of their pension scheme. This review highlighted that trustees need more support to provide effective communications to members. There were concerns that members were not given the right help and information during the restructuring exercise.
Rookes made a number of recommendations including legislative changes to provide a more structured and consistent approach to member consultations. She also suggested there was scope for The Pensions Regulator (TPR) to adopt a new role - to look at whether a scheme is fully equipped to handle the member consultation. If it was felt that insufficient information and support was available, then the consultation could be put back or stopped altogether.
The report goes on to recommend that Schemes should have case studies that they can refer to with examples of best practice. Sharing information between regulatory bodies would maintain a wealth of knowledge as well as alerting schemes to potential warning signs.
“During exercises the regulatory bodies should operate in a more collaborative way with the wider partners (eg the communications agency) to ensure there is a joined up approach to supporting members through the process”.
If you have experienced an issue on a journey, you share it, to make sure that someone else doesn’t have the same problem. A sat nav can even alert you to road closures or hazards.
John Govett, Chief Executive of the Single Financial Guidance Body commented:
“We will be looking carefully at how we can take forward the report’s recommendations under the wider work of the Single Guidance Body; specifically, the importance of collaboration and working together with regulators and the pensions industry.”
Collaboration is vital in making sure key information and experiences are shared. There also needs to be a clear structure of the roles of the different regulatory bodies and how they can feed into processes. This structure will help to ensure that communications provided to members are consistent and easy to understand.
There is a big difference between communicating information and communicating effectively. Whilst an actuary has an in-depth understanding of how pension benefits are calculated they would not necessarily be the best placed to relay this information to members. In the same way that a Company or Trustee Board receives advice from a lawyer or actuary, it makes sense to get advice from a communications professional, whose expertise is in simplifying complex messages. By doing this you can be more confident that members understand the information they are given to make informed decisions.
Pensions and employee communication specialists should also be able to direct trustees to the most appropriate channels, based on their particular scheme. The British Steel Pension Scheme (BSPS) had been advised to set up a Facebook group to share information about the consultation with the members. The BSPS did not take up this option, which was a missed opportunity to engage members and allow them to ask questions as part of a group. Schemes need to adapt and take advantage of the media that have become second nature in our everyday lives.
It makes sense for standards to be introduced to ensure that all members have access to the information they need and to ensure they don’t look back and discover they are worse off for making an ill-informed decision. This should include the technical and process side, as well as how the message is communicated and the channel used. If there is no consistency or set standards for the type of information provided, it is very difficult to monitor a consultation process and resolve any obstacles early on.
You don’t have to be an expert to know that you can provide members with as much information as you like, but if you don’t provide clear directions, they won’t end up in the place they want to be.