DB comms: How much information do you give to members?
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The BT Pension Scheme is introducing a new website and member portal as it integrates in-house administration and member services, but how important are online services for DB members, and should transfer values be available to view online?
A slick online service can improve member engagement and make communications easier, but the rationale of investing to increase engagement among DB members has in the past been questioned. However, the BT Pension Scheme, one of the UK’s largest, has decided to go down this path after taking administration in-house in May 2018.
The BT scheme says that a new website and member portal will be going live later this spring. “Following members’ feedback, we have been investing in technology and modernising our online services,” the scheme notes.
The website address will change from to btps.co.uk from the current btpensions.com, and the change also means members will need to re-register.
Integration with in-house administration
The new portal will give access to information, track requests made online and offer the ability to update personal information. It will also include a pensions calculator where members can input different retirement dates and see what the effect on their pension would be, as well as an option to manage AVCs. Members will be able to generate an illustrative transfer value themselves on the portal, and be able to request a guaranteed transfer-out quote online.
The scheme chose to change the service platform to integrate this with its in-house administration. Bringing the contact centre onshore led to an immediate increase in member satisfaction, the scheme says, but it wants to do more.
“To really focus on the member experience, we need to be able to control the service our members get,” a spokesperson said.
The scheme is currently investing in its technology with the help of pensions software company, Procentia, which the scheme bought in December 2019, and is in the final stages of implementing the firm’s Intellipen system for its administration services.
“This will give us true integration between the administration workflows, database and member portal. This should improve not just the speed of delivery to members but offer real-time amendments to records and provide a single view to both members and administrators,” the spokesperson said.
Good information, good decision-making?
While many schemes would want to set engagement targets and measure engagement when introducing a member portal, BTPS says it is not setting targets.
“Obviously, we’d like all our members on board but it’s too simplistic to judge success just by the number of registered users. We want members to be able to confidently self-serve but using a portal won’t be for everyone. It’s one part of our omni-channel service to members,” the spokesperson said, adding that the scheme, on “a journey of continuous improvement”, wants to see how members use the portal.
The scheme argues that good information is at the heart of good decision making. “Giving members access to information about their own pension, and the options available to them, should empower them to make better decisions. In addition, having online access means members can do their research at a time that suits them,” the spokesperson added.
However, the scheme also acknowledges that some areas of communication require care, like providing a transfer value to view online. “It’s a careful balance between the provision of transfer values and warning members about the associated risks,” the spokesperson admitted.
The need for a careful balance might also be one of the reasons why the scheme has chosen to let members generate transfer values, rather than providing them without members expressly asking for it. The Pensions Regulator and the Financial Conduct Authority have recently stated that although unasked for transfer values are allowed, schemes should “consider whether giving an unsolicited transfer value is likely to result in good outcomes for members” and that “some members may misunderstand how a seemingly large transfer value is equivalent to the level of scheme benefits on offer”.
Schemes are however permitted to show transfer values; they are also allowed to show the effect of giving up some inflation-linked pension increases in favour of a higher starting pension. The BT scheme has declined to comment on whether the latter is planned, but a preview of the new portal shows a function to view the value of the pension “without PIE” or “with PIE”.
Having a member portal for DB members could make a liability management exercise like a PIE potentially more effective. The BT scheme has shown concern about inflation increases for some time. It tried to change the RPI-linked increases in one section of the scheme to CPI in the High Court but failed. It is now one of three schemes seeking a judicial review of the government’s decision to align RPI with CPIH from 2030. The government said it would not compensate holders of index-linked bonds, which are currently linked to RPI. The trustees of the three schemes said that this is "weakening schemes’ funding positions and, in turn, adding pressure on sponsoring employers".
Freedoms and consumer habits heighten importance of online presence for DB
The fact that DB members have the option to transfer out is one of the factors that make an online presence more important for schemes, argued Simon Grover, director at communications consultancy Quietroom.
“Time was when DB members didn’t really need to think about their pension, so a portal like this would have been pointless. But now members have transferring out and pension freedoms on offer, and are more likely to have several employer schemes to think about over their working life,” he points out, saying they will therefore find it useful to have 24/7 access to their pension records.
However, he shares the regulators’ concerns about schemes offering transfer values, which is becoming more common. “Behaviourally, a large sum payable soon is so much more attractive than a regular income paid over decades, so many members will take this regardless of whether it is really in their best interests. Schemes must be very careful how they present this information, including of course some strong messaging on scams,” he cautions.
Nonetheless, having a website and member portal is becoming necessary because consumer habits have changed. “People of all ages increasingly expect information to be available online, to get facts and figures instantly, accurately and in an easy format. So it’s right for pension schemes to go down this route if they can,” said Grover.
Grover said he would even encourage schemes to adopt a ‘digital first’ policy, with paper only as a fallback, as it can be easier to present segmented or personalised information online than on paper.
What do you think – should DB schemes have self-service portals for DB members?