The latest GMP equalisation comms guide by the GMPE Working Group focuses on implementation, with pension funds advised to see things from the member’s perspective and in the context of other work and comms exercises affecting their experience. The guidance has the support of the Pensions Regulator. 

 

The group, chaired by the Pensions and Administration Standards Association, on Monday published follow-up guidance on communicating GMP equalisation to members. The communications subgroup had issued guidance on the early planning stages of the communications process in August last year.
   

   

 

The guidance was welcomed by TPR. Lucy Stone, a policy lead at the regulator, said when TPR started to hear from contacts about the Lloyds ruling and the need to rectify benefits, it was apparent this was going to be a substantial piece of work for the industry. 

 

It also contained the risk of different approaches being developed and conflicting advice being given, increasing the burden on schemes, she said speaking at a webinar organised by PASA on Monday, so “we were delighted when PASA offered to chair that group”. She said she was “very impressed” with the guidance, which she described as concise, considering its range, despite bringing it to 281 pages. “You can look at this guidance and be confident you’re doing something sensible.” 

 

Stone said that immediately after the Lloyds ruling three years ago, the focus was on managing expectations and assuring industry that TPR was aware of the time it would take to address GMPs. 

 

“At first, our messaging was around, ‘It’s going to be really hard, industry will produce guidance’,” she said. However, “we have moved on. By now trustees really need to have a clear path to GMP equalisation”, she said, and stressed it was critical that schemes talk to administrators “because we know there is a capacity issue in the industry”. 

 

Actions trustees should have taken by now include choosing the methodology, scheduling the work with the administrator while taking into account other projects, and addressing data gaps. 

 

Member communication, the topic of the latest guidance, is especially tricky, she said, noting that GMP equalisation is complicated to understand even for those who work in this area and also hard to explain to people who work in other areas of the industry – let alone to members. 

 

However, “the first guidance by the working group was an [example] in communicating in simple language. We also welcome this next piece of guidance,” she said.  

 

 

As its guiding principles, the group considered what people should know, how funds would like them to feel about this, and what action they are encouraged to take, if any. It therefore recommends funds should layer information to avoid overloading members; use different channels; leave away information that would only confuse the saver; steer clear of jargon; involve others; and be trustworthy. 

 

 

 

The guide contains a ‘change curve’ infographic which plots the reaction funds may expect members to have over a period of time when they find out something is going to change. Louise Harris, chair of the sub-group and senior director communications & change management at Willis Towers Watson, said the aim is to address those reactions and take members through that change “with the least resistance possible” and “feeling confident in the trustees’ approach”.  

 

She stressed that any communication must be seen in the context of other changes and comms exercises the scheme has been or is going through and which influence the members’ experience, and be consistent in style with previous communications so it looks familiar. She pointed out that some deferred members might not have seen a letter from their scheme in years, creating challenges around whether they would trust it in the era of pension scams and warnings. 

 

The guide also addresses timing and recommends to carry out member segmentation, prioritising pensioners if required. It also sets out 10 questions to ask about data up front, such as ‘do you know what data items you need to communicate', in the form of an interactive checklist. 

 

 

Industry has welcomed the guidance, with Lynda Whitney, partner at Aon, saying that it highlights the need to focus on “what the member truly needs to know about the situation, and the advantages of layering information for those who want to know more”, giving members the option to disengage early. 

 

“We have found that a simple letter is very effective for pensioners, supported by a website with more information about the project, and a second layer for those who want to know the detail of their impact on their tax position,” she said. 

  

To engage members where they have a choice, for example where funds carry out GMP equalisation through conversion, alongside a pension increase exchange exercise, she said it was important to focus on the choices they have, rather than the detail behind them. 

  

“GMP equalisation can be a bit of an iceberg with lots to do under the surface, but the member usually only needs (and wants!) to know about the tip of the iceberg - so don’t sink them with too much detail or jargon,” said Whitney. 

 

Lynda Whitney

Joe Anderson

Ian McQuade