Half of DB scheme trustees believe the pandemic has increased the need for schemes to invest in engagement strategies about member options and provide access to financial advice for members, according to research from Hymans Robertson.
The fallout from Covid-19 has also compounded the need for those approaching retirement to review their plans, according to Hymans, as it warns that trustees must take action to implement these changes.
Changes to working patterns and styles due to Covid-19 have also led to an increased recognition that digital communications with members is important and trustees are seeing the need to adapt. Nearly two thirds (59 per cent) of DB trustees now believe that digital communications and technology should be used to engage with their member’s needs, according to the research. This is a sharp increase from only 5 per cent supporting online communications in the pre-pandemic survey in 2020.
There has also been a large increase in the number of DB schemes considering a Pension Increase Exchange (PIE) and offering members increased choice about their pensions, according to the research.
The number of trustees saying their scheme was considering this jumped from 9 per cent in 2020 to 49 per cent this year, with partial transfers also increasing from 9 per cent in 2020 to 42 per cent in 2021. This further highlights the view that retirement options must be diverse, as individuals have different circumstances and trustees must ensure there is no longer a one size fits all approach.
Hymans Robertson partner Ryan Markham says: “The effects of Covid are far reaching with many members close to retirement impacted in ways they quite simply had never imagined pre-pandemic. Some may have lost their jobs or are now in poor health and might face an immediate need for early retirement. Others, however, may have had to reprioritise their pre-pandemic timescales and are looking for more flexible retirement options.
“Trustees must recognise this change and ensure that they are able to provide guidance and assistance at not only this stage, but throughout the retirement journey.
“The rapid increase in the use of technology over the past 18 months, has created a need for trustees to be more creative in their communication approach. By engaging with members digitally, employers can ensure that decisions can be made with full and concise understanding to help achieve retirement goals. The desire to offer members greater choice within their DB scheme by offering PIE and partial transfers is hugely encouraging at a time when greater flexibility both within and outside the DB scheme could be of real value to some members.
“It is vital, however, that actions speak louder than words, and that trustees fully understand the impact Covid-19 has had on their members.
“They must offer genuine support far beyond the short-term promise to make sure members are guided to choose the best investment outcomes. They must also ensure the safety of their members savings by offering advice on how to protect themselves from unscrupulous scammers who may be preying on them. Member engagement combined with valuable choice leads to better decision making and outcomes for members, and in tandem, reduces the risk to the scheme leading to better outcomes for all.”