Trust between members and their pension provider forms the foundation of any successful pension fund communication strategy. When members receive clear and accurate information about their retirement plans, investments, and benefits, it establishes trust between the fund and its members. Trustworthiness paves the way for a positive and lasting relationship, enhancing members' confidence in their pension fund's commitment to their financial well-being.
Not all members will understand the intricacies and complexities of pension fund arrangements and how they are structured, let alone what to do when it comes to retirement, so it is key that providers use clear and simple language to engage. A recent Lexis Nexis and Professional Trustee study found a strong correlation between members who engage with their savings and those who can retire comfortably. The study found that 61% of people who can retire check their pension savings more than once a year, compared to only 30% of members who are not saving enough.
By simplifying complex financial concepts, and providing educational resources, pension funds can empower members to make informed decisions about their retirement savings. Improved financial literacy equips members with the knowledge to optimize their contributions, investments, and retirement planning strategies.
Simplicity and clarity in communication are paramount, unfortunately this is where the industry can often get stuck. In the realm of pension fund management, it's not uncommon for both funds and administrators to become entangled in the intricate web of legal and compliance matters. Amid these complexities, however, it's crucial to avoid losing sight of the fundamental needs of the members they serve. In today's fast-paced world, attention spans are fleeting, making it imperative for the industry to improve and simplify its communication strategies.
The pension fund sector is inherently complex, guided by stringent regulations that underscore its significance., The use of visual aids, infographics, and video content should not be underestimated. These tools possess the remarkable ability to distil intricate information into easily digestible formats that are engaging and easy to understand.
Think about the concise appeal of TikTok videos, Instagram stories, and instructional guides – these formats effectively convey messages without squandering the limited resource of time. Could we not similarly convey a member's benefit statement through a personalized video or a captivating story? The average millennial, which is the biggest cohort of pension fund members, spends hours a day on social media platforms such and Instagram, X (twitter) and Tik Tok, it is important that more providers use these platforms to engage this population. It is reported by the UK Government that whilst there has been a significant increase in this age group participating in investing into a pension over the last 5 years, they are still broadly the least likely age group to invest into a pension scheme or most likely to opt out of a workplace pension scheme.
Revamping member communication within the pension fund landscape demands the engagement and commitment from investment providers, pension administration companies and financial advisors across the industry to drive change for the better. This is a process that can be challenging and even financially demanding. Understandably, convincing pension fund trustees to embrace a departure from traditional communication strategies is no small feat, potentially introducing additional costs into the equation.
Cost containment is a cornerstone of the pension fund industry. However, the quest for enhanced member engagement and satisfaction may inadvertently introduce costs on two fronts. Firstly, there's the expenditure associated with crafting and delivering content to members. While digital platforms offer a cost-effective alternative to traditional mail, the increased frequency of these digital interactions could pose its own challenges.
The positive outcome of well-informed members is often a decrease in inquiries, calls, and member-generated questions. This necessitates an investment in member assistance by administrators. Should a pension fund boast a polished and engaging educational strategy, members will naturally expect a similar level of interaction when seeking information. Implementing live chats, intelligent bots, and responsive agents becomes not only necessary but also a potential deterrent. With the evolution of better and more structured communication these queries will naturally continue to reduce, and members will become more comfortable with the process.
Lastly, the spectre of fraud and predatory scammers looms over both pension fund members and the industry at large. It's imperative for the sector to explore security measures such as those used by banks, with the goal of minimising the risk of fraud for members. With better and more consistent education, members will be able to spot fraud early and take the necessary steps to avoid being a victim.
Amidst these intricate dynamics, pension fund administration entities may grapple with assessing the cost-effectiveness of elevated member communication. However, they are keenly aware that overlooking this responsibility is not an option. With steadfast dedication and innovative thinking, all pension providers and others who contribute to the industry, including trustees, and the media have the power to significantly contribute to a future where well-informed and prosperous retirements become the norm for individuals across the United Kingdom.
Jaco Wasserfall – Chief Executive and Founder of PensionSmith
