Pensions - Articles - Poor member communications risks major delays to buy-out

As many DB schemes move towards buy-out, with increasingly condensed timeframes, trustees risk leaving member communications too late, leading to confusion for members and eroding their confidence - which could lead to complaints and risk delaying the buyout.

 

The paper from the leading pensions and financial services consultancy highlights that members must feel informed about decisions and clear communications are important at each, and every stage of the buy-out journey,  Early planning is also vital. In addition, it outlines that effective member communication should focus on three key areas - what members need to know, when they need to hear it, and what is the best means of engaging. Trustees that treat communications as a strategic part of the buy-out journey, rather than a final-stage exercise, will be better placed to support members and avoid unnecessary anxiety and confusion, adds the consultancy.

 

Commenting on member communications as a key factor in delivering successful outcomes, Donna Prince, Head of Member Experience for Risk Transfer, Hymans Robertson says: “As more schemes move towards buy-out there can be a tendency to focus mainly on the speed at which they can move from buy-in to buy-out; with more and more looking to move quickly. However, this is a significant moment for members – they are moving from a scheme, Trustees and a Sponsor they know to a, sometimes unknown, insurer. How it is communicated can have an impact on their confidence and understanding.

 

“Our research shows that members' top priority is having confidence that their pension will be paid for the rest of their lives, so it's important that communications support, rather than undermine, that confidence. Information should provide clear reassurance about what’s changing, what’s staying the same and what decisions mean for their retirement income. When communications are delivered too late or without the right information or planning, trustees can face increased member queries, confusion and avoidable concern.

 

“The most successful communications strategies are built around clear and simple questions. Planning early doesn't mean communicating early. It means understanding potential decision points in advance, building them into the buy-out timetable and making sure members receive the right information, through the right channels, at the right time. Member communications must be viewed as a core part of endgame planning rather than a final administrative step. Engaging members early and providing clear, timely information throughout the transaction can help build trust and support the overall success of the transition to buy-out for everyone involved.”