NEST, the UK's national pension scheme, due for implementation in 2012, has come under fire from all angles. Now its communication strategy is being questioned as well. Pension Funds Insider assesses the criticism and how other schemes are progressing when it comes to taking to members.

Katie Frost, a director at UK firm Shilling Communication, believes that pension funds must make use of all the media available to them so that "you don't exclude anybody from the information that you are providing".

She is worried that NEST's online communication strategy will negate the opportunity to create more savers in the UK with the introduction of auto-enrolment.

Frost has criticized NEST's strategies before and her concerns are based on the scheme's apparent one-for-all approach. She questions such a policy, arguing that the fund is open to everyone and therefore will include just about any demographic possible.

"They need to segment their audience, look at the different ages, different preferences and different business sectors rather than saying 'this is it, like it or lump it'," says Frost.

Her comments are in line with pension regulators' focus on improving communication. In the UK, The Pensions Regulator has issued guidelines on how schemes should approach their members. And the Dutch financial watchdog has also been keen to highlight good practice.

Just this week Pension Funds Insider spoke to Peter Borgdorff, executive director of one of the Netherlands' biggest schemes PFZW. In an exclusive interview he stressed that although the PFZW scheme scores high in the field of member communication it was something that PFZW would continue to work on. "We want to enter into a dialogue with our members," he said. "We can learn from them."

This understanding is key, claims Richard Ayers, one of the founders of Face to Face Consultancy, another communications specialist firm.

"With the upcoming automation (in the UK), education should be really up there with the key commitments of businesses because at the end of the day with millions of pounds being put into pensions the whole idea of auto-enrolment is that it is done to you and you don't want employees feeling that they spend money but are left with no understanding of what they are paying for," he says.

So what is best practice? Frost says organisations who use a mixture of communication methods work better, especially if they also split their communications according to different age groups and sectors. She mentions the Australian scheme AustralianSuper.

"We have studied their success. They have split their member base into 60 different groups and communicate differently with all of them, not hugely different but elements are different. The communications their members receive are relevant to them. It worked really well. As a provider you have to make sure you don't give members irrelevant information because they will not read it and will put it down next to them." Not only will this result in nothing it will cost the scheme valuable funds.

She is also a fan of the oldest form of communication. Traditional face-to-face meetings aren't always possible, she says, but there are other options, for example webinars and video, "so people can still put a face to the communications".

Ayers says that good open dialogue should not be ignored by companies who also want to deliver value in everything they do. "You might have a big pension bill for your employees but unless they engage in it, understand it and value it then actually is it really worth the money you are spending?" asks Ayers.

"Employers need to help their members understand it all."

Frost agrees, saying that improvements do not have to be incredibly expensive. "Companies spend hundreds of thousands of pounds in setting up a scheme and unless their members can make the most of it they will not succeed in their goal and then it will be a waste of money anyway," she says.

"If schemes invest money in communications and communicate properly with their members they will be able to understand the scheme, the offer and what it can do for them and value it."

A model example?

Lend Lease, the international construction group, is one firm that seems to have grabbed its employees' attention when it comes to the company pension fund. Their scheme welcomes new members with a good website; clear and simple but incorporating all the information they might possibly need. Not just about their own pension scheme but about retirement provision in general, from private pensions to state pensions.

Members of the Lend Lease scheme can log-in on the site with a unique code. This way they can see their personal pension details and have access to a pension modeller, allowing them to play around with various risk factors and possible pension outcomes. With this system they are in charge of creating the perfect balance for their specific wants and needs.

In their communications the company makes sure it speaks to its members and doesn't just talk 'formal pension speak'. For example, the image material they use is all taken from jobs that Lend Lease has worked on, making identification possible for employees. It has to be "their pension scheme".

"We make the communications suitable for the different types of members we have," says Mick Joyce, pensions officer at Lend Lease. "Not only in terms of the work we do but also catering for the different needs between the age categories. For example, we have a different message for younger members than we have for those in their late fifties who are looking forward to retiring in the near future."

An important factor is that Lend Lease is continuously looking to improve their communications. "Our learning curve never stops," says Joyce. "We always ask for feedback from our members and really take it onboard. On top of that we show all our communications to third parties and ask them to be critical of it, what do they think of it?"

The strategy seems to work, take-up of the scheme by the staff is between 70-80%. This is even more extraordinary when you think that members have to pro-actively sign up, they need to visit the website themselves and fill in the forms – no auto-enrolment here.

Defending the NEST

Graham Vidler, director of Communications and Engagement at NEST, does not think the criticism from Frost is fair however, and talking to PFI he sets things straight by explaining about the various options members will have.

"We are going to make a variety of channels available to our members. Many of them, we think, are happy with getting the information online," he says. "But we are aware that a number of our customers might also want to use different channels. They can request written information or use the UK call centre which is open from 8am to 8pm."

Even web-videos and podcasts are on the menu, says Vidler. He expects that these will be delivered by NEST in the near future. The scheme does currently have video content on their site and it becomes clear from talking to Vidler that NEST's approach is that as their member base grows then new ways of communication, online communication, will be explored.

Other employers as well can improve their communications and this does not have to be incredibly expensive. "Companies spend hundreds of thousands of pounds in setting up a scheme and unless their members can make the most of it they will not succeed in their goal and then it will be a waste of money anyway," says Frost.

"If schemes invest money in communications and communicate properly with their members they will be able to understand the scheme, the offer and what it can do for them and value it."

On a bigger scale one would expect to see more communications from the Department for Work and Pensions. Indeed, those running NEST say they expect something, perhaps a campaign, later this year. However, there do not appear to be any concrete plans in place as yet.

A DWP spokesperson told Pension Funds Insider that "the changes are not coming into effect until next year – we will see to it then that people will be sufficiently informed."
 
First published 15.06.2011

azeevalkink@wilmington.co.uk