Economic uncertainty is nothing new. With major events rocking our markets repeatedly over the last few years, we've been somewhat prepared for what is now upon us. We have experienced major economic downturns through Covid-19, and then with the 2022 gilts crisis.
Pension schemes are vulnerable to the turbulence of challenging economic times. Although many have sought to diversify, building in some protections for members. There is no escaping the impact a global downturn will have on the value of people's retirement savings. Ultimately, members need more help than ever to ride out the proverbial pension savings storm — and effective communication plays a key role in supporting them.
At Gallagher, we take a people-centric approach to communicating with scheme members, and in times of uncertainty our approach remains reliably consistent: Communicating from the heart. We put ourselves in members' shoes. And we foster empathy and understanding, recognising unique perspectives and concerns.
Now's the time to listen
When there is an economic downturn, we know pension scheme members will have a myriad of concerns and questions. As communicators, it's our job to recognise what they really care about and tailor messages accordingly.
With defined benefit (DB) schemes, challenging markets can impact the strength of employer covenants, as well as creating investment volatility affecting scheme funding levels.
But what members really want to know is, how secure is their pension? Why has their transfer value gone down? Have they lost money? And for retirees, will their pension benefits continue to be paid? It's easy to fall into the trap of communicating high-level messaging about the diversity of investment strategies or a scheme's funding position, without telling members what they really need to hear.
With defined contributions (DC) schemes, ultimately members are bearing the financial risk. We need to be sympathetic to that and ensure communications are tailored depending on where members are in their retirement journey. For example, those close to retirement may have seen a significant reduction in the value of their fund — just months before they're due to retire — and may need guidance as they seek to understand and potentially reassess their retirement options.
Other members may have wider financial concerns that could impact their ability to contribute towards their retirement. They may consider reducing their contributions or even opting out of their scheme altogether. Whatever members decide is right for their personal financial journey, it's important their decisions are informed and considered.
Here's six tips to consider:
- Be transparent and clear: Being open and honest about the impact of economic uncertainty on retirement plans and savings will help to build trust with members. Use clear, jargon-free language to make communications simple and easy to understand.
- Provide reassurance and support: Offer reassurance to members by highlighting the long-term nature of financial planning. Signpost members to appropriate support, this may be online information and tools, information sessions or workshops. Free services like MoneyHelper can be a good start1.
- Tailor communications to your audience: Recognise that employees have various levels of financial literacy and retirement readiness. Tailor communications to address specific needs, from those just starting out, those mid-way through their working life, right through to those nearing retirement.
- Adopt a multi-channel approach: Use a variety of communication channels to reach employees, traditional print can still be impactful, but websites and email are the go-to channels for most. This ensures that members can access information in a way that suits them.
- Encourage proactive engagement: Encourage members to actively engage with their retirement planning by reviewing their savings, understanding their investment options and considering adjustments if necessary. Provide tools and resources to facilitate engagement, online portals give up-to-date figures, calculators and modellers can help people understand different scenarios, and short explainer videos can walk members through the most complicated pension processes.
- Listen: It's the most under-rated part of communications, listen to what your members are saying about what they're experiencing and hearing. Misinformation can spread quickly. Establish confident, trusted, lines of communication that members can turn to if they have concerns.
These aren't just 'nice to haves', pension schemes have a duty of care to their members to help them navigate this uncertainty, supporting them to understand what's happening to their retirement savings, and wherever possible avoiding poor outcomes.
Gallagher can help
We understand how important it is to get this right for your members. From all aspects of retirement planning to actuarial consulting, pensions administration to retirement communications, Gallagher can help. Our breadth and depth of our experience means that whatever your members are facing, we've got them and you, covered.
Start your journey with us today; get in touch.
Source
