Modern communications technology is clearly making its mark in the pensions industry. Pension Funds Insider asks whether the web may be about to facilitate a fundamental change by bringing together the most loosely connected group in the industry – the scheme members?

There are 17 members in the UK's Civil Service Pensioners' Alliance Stop the change from RPI to CPI for pensioner indexing Facebook group. This may make it a tiny grouping compared to the hundreds of thousands who supported the Egyptian revolution page via the social networking site, but the fact that such a group exists on the internet is significant. Use of such social media tools to clearly spell out the positions of a number of pension scheme member groups is building a new bank of opinion that trustees and sponsors need to react to.

Mike Post was receiving countless emails as a trustee of British Airways' Airways Pension Scheme from members concerned how much of their pension they would lose under its sponsors' plans to change pension payments from a linkage to the lower Consumer Price Index (CPI) inflation rate from the Retail Price Index (RPI).

In spring 2011, Post and two other trustees resigned to show their opposition to the proposed change. Post, a retired pilot, has since played a major role in coordinating the members' campaign via the Association of British Airways Pensioners' (ABAP) internet page.

Post confesses to being amazed by the possibilities of internet campaigning. Speaking with a long background of co-ordinating pension scheme member interest, he says that modern technology "dramatically reduces cost and increases ease of sending out information."

A comparison with the campaign that Post headed in 2000 (against a merger of the Airways Pension Scheme with another fund that British Airways sponsor, the New Airways Pension Scheme) is revealing. Post recalls the weeks of difficulty he had 11 years ago, when the internet was in its infancy, to get the 100 requests from members he needed to trigger a postal ballot of the scheme's membership.

Some 1800 requests were gathered by Mr. Post in just eight days after calling for a ballot in 2011 though, with the help of a website to promote the cause and viral emailing.

Back in 2000, advertising the possibility of a postal ballot required face-to-face meetings, phone calls and letters. That was a difficult means for reaching out to thousands of scheme members from an organisation that relies on voluntary subscriptions and donations.

Roger Turner, executive officer of the Occupational Pensioners Alliance (OPA) pressure group admits that "our funds don't stretch to sending letters out via Royal Mail to all of our 90,000 members, so getting up-to-date news to them is just not possible otherwise."

Turner has also found 'calls to action' sent via email to be highly effective. Referring to a recent e-newsletter about the CPI issue he says: "We found that very many more people responded to that and acted on our requests to write to people on the issue than has been the case for anything else in our 14 years of existence, including our regular printed magazines."

Connecting away

Along with the added ease of organisers contacting members, the interactivity of the internet is also allowing interested pension scheme members to discuss issues and formulate opinions. The OPA's internet page, for instance, contains a private forum where the recipients of occupational pensions discuss matters such as the controversial difference between RPI and CPI, along with day-to-day issues like health and travel.

Member groups also have new ways to with the rest of the pensions industry over the internet. Post and other ABAP organisers have been actively using mallowstreet, the pension community's very own version of Facebook, to reach out for help from professionals. Post says "we've received forum advice and private advice from lawyers and actuaries there, which has all been very useful."

Scheme member campaigning reached the world of YouTube recently with a slickly-produced nine-minute video featuring the trio of trustees to have resigned from the Airways Pension Scheme board, explaining their opposition to CPI and likely consequences to members. Post agrees that presenting the issue in a television style debate has been aiding awareness of the issue amongst scheme members who may be less receptive to written communications containing complex pensions terminology.

The 2,500 views clocked up within a month of the videos publication is also useful, publicly-available evidence of widespread interest in the campaign.

The video has also been recorded in high definition in order to communicate the ABAP's position should broadcast media wish to report the issue. Airways Pension Scheme members that have been encouraged to write into MPs with their worries about a change to CPI have been linking parliamentarians to the nine-minute video, making Post "sure that some MPs have seen the level of anger out there".

A new pensions order?

For all the undoubted power of internet campaigning, it has only just started to leave a trace in the pensions industry. Critics can maintain that for all the added communications capabilities, there is yet to be any stemming of the tide towards less generous corporate pension provision in the UK.

Technology has perhaps been even more helpful for sponsors to make their case for scheme changes that negatively effect members. For instance, annual pension scheme deficit figures are routinely emailed out by well-oiled corporate PR machines to appear a few hours later on investors' screens across the world.

There is also the argument that pension schemes, with infrequent trustee meetings and a cumbersome decision-making process, do not have a structure that permits them to heed the new breed of online member activism. Turner said that the majority of trustees are yet to be aware of online member opinion, saying: "I'm not sure that most trustees are responsive yet. Although the views of members are available online, their job is essentially to pay the pensions when they are due and follow the rules of the scheme."

Shell Pension Fund trustee Paddy Briggs foresees online member campaigning forcing trustees to change the way they interact with members, though. Briggs argues that the ubiquity of modern communications is such that scheme trustees now have far more pressure on them to account for a scheme's actions, as has been seen in the British Airways case.

Briggs urges trustees to consider adopting more 'two-way' communication with members via the internet, saying that there is a need "to realise that the old way of doing things just won't work anymore."

He added that "the new reality is that a board's duties include that of managing the perceptions of its members and other stakeholders. And that requires a professional approach and is likely to require the use of all of the modern communication tools."

There is also scepticism within scheme member groups about depending entirely on internet communication with retirees. Post confesses his surprise at having received emails from members over the age of 90 but added "there are a significant number of members who probably don't have access to the internet – it's a bit like advertising, we don't really know who we're missing. In particular, pensioners with smaller pots are less likely to use the internet."

Nonetheless, adds Post, the role of online debate in pension fund decisions can only increase in the future.

First published: 16.06.2011

dbillignham@wilmington.co.uk