In the latest diversity and inclusion guidance, The Pensions Regulator (TPR) highlights that good member communications are vital in engaging beneficiaries to ultimately make good decisions about their pensions. 

What should schemes focus on to ensure beneficiaries can help themselves?

mallowstreet’s Trustee Report reveals that the majority of DC schemes list member engagement as a key challenge and area for improvement.

However, the Diversity, Equality and Inclusion (DEI) Report shows that 43% of schemes with professional trustees have made their member communications more accessible, compared to the pension organisation average of 24%. This suggests that professional trustee firms are making significant strides with more advanced DEI policies.

 

TPR calls for communications to reflect the diverse needs of the members, including their technology skills, or lack thereof. This is supported by the findings of the Trustee Report, where 50% of UK trustees say they plan to shorten the length of communications and 86% plan to use more inclusive language with no jargon.

Concise communications can help improve understanding, which is empowering for the members to learn and then act.

Indeed, TPR emphasises that schemes ‘make members feel seen and valued’ when they can demonstrate that their ‘members’ views inform the design of investment strategies’. This shows schemes with good communication are concerned with their members’ pension outcomes. 

The regulator also highlights the power of external resources, including the UK government and other initiatives. TPR strongly encourages inclusive communication and website design. Further, schemes are urged to use apps to review language for bias, stereotypes and readability. Ideally, schemes should post their communications on a range of platforms to reach as many members as possible.

This chart from the Trustee Report shows that schemes think engagement is important mainly as members approach retirement.

However, mallowstreet calls for preparing and communicating with beneficiaries early (i.e., during the risky accumulation stage) and throughout their pension journey to post-retirement. 

Ongoing communications with members are a legal requirement. However, TPR strongly recommends providing more than the minimum level of information. 

One suggestion is regularly embarking on fact-finding missions to identify the needs of members. An example is to note frequently asked questions and to then publish information that answers them. To truly understand the evolving needs of members, TPR suggests having regular forums, workshops and member panels, and inviting members to AGMs.

In fact, unlocking engagement should not favour one method over the other; rather, the Trustee Report highlights that all communication tools should be used together. This creates a sense of urgency for members to contribute towards their retirement savings.

Be intentional with the frequency of communications

As pointed out in our first article on hiring diverse talent, communications should be reviewed and tested against a pre-agreed definition of DEI.

The key is for schemes to carefully balance between providing empowering information and not overwhelming their members with unnecessary communications. This is particularly important given that, according to the Financial Conduct Authority, over 50% of the UK population is vulnerable in at least one way.

The adequacy of pension contributions significantly impacts members’ living standards post-retirement. 

Although 40% of DC schemes say increasing member engagement can improve the contribution each member puts in their pots, mallowstreet highlights an array of methods to be used in conjunction.
 

For example, over half of DC schemes say increasing minimum auto-enrolment contributions is the most impactful method to improve DC pension outcomes, whereas 47% look towards consolidation via master trusts or addressing the issue of ‘small pots’. 

Not one approach is a fix-all solution for insufficient savings, but in conjunction with creating engaging communications, members will hopefully be encouraged to add more to their pot.