Two-thirds, or 67 per cent, of defined benefit pension members say confidence that their pension will be paid for life is their top priority.
This is according to research by Hymans Robertson, which warns that member communications should be treated as a core part of buy-out planning rather than a final-stage exercise.
It said clear communication is needed throughout the buy-out journey, particularly as schemes face increasingly condensed timelines. Leaving communications too late could create confusion, reduce member confidence and increase complaints, potentially delaying buy-out.
Hymans said trustees should consider three areas when planning communications: what members need to know, when they need to hear it and the most effective way to engage them.
Hymans Robertson head of member experience for risk transfer Donna Prince 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.”
