This month’s Off The Record looks at the news media – press, television and radio - and the way it reports pensions issues.
Pensions now make headlines almost every day. The demographic time bomb, the closure of defined benefit schemes and the need for pension reform throughout Europe are currently all hot topics.
Pension issues are firmly on the agenda of the news media - but is this necessarily a good thing? Are the issues being reported fairly and accurately? Are the press right to alert the public to under-funded pensions or are older people being alarmed unnecessarily? And what of younger people?
We wanted your views. And this time we got rather more than we bargained for. We were certainly unprepared for the high level of dissatisfaction with media coverage of pensions and pensions issues.
A clear majority (59%) of the pension fund managers and administrators who answered our questionnaire do not think the news media’s coverage of pensions issues today is balanced, fair or accurate.
In spite of this, they feel the media has acted as a useful whistleblower. A similar sized majority (57%) agree with the proposition that media coverage has increased public understanding of pensions issues. A manager at a Danish pension fund says: “ Even if the media does not always present a correct and fair picture of the industry it makes people aware that they must not ignore old age or health coverage.”
Yet there still is plenty of dissatisfaction here. One UK pension fund manager warns that sensationalist reporting has led to a situation where “the public now seems to think all pensions are at risk because some funds have failed”.
There are also strong doubts about whether the news media are focusing on the key issues in the pensions industry. A slight majority (47%) believe they are, while a significant minority (43%) believe they are not. The manager of a Swiss pension funds manager says the media focus is on “just what’s bad news for the public. But that’s their main goal - to bring bad news”.
A Danish fund manager points out that journalists perhaps devote too much attention to the affairs of the investment community: “The media focus is primarily on asset management and thus the picture drawn is much more volatile, confusing and ever changing than necessary.
“We need a basic knowledge about what issues pension fund members should really be concerned about. But the fact that such issues mostly involve discussions on long term conditions, macro-economic subjects and insurance risk makes it difficult to give a story a catchy headline that will attract readers.”
A large majority feel (87%) think the press has made people generally more aware of the need to save for a pension, and almost as many (82%) believe the press has not been alarmist in its reporting of longevity – the so-called ‘demographic time bomb’. A Swiss pension fund manager points out that “Alarming people is necessary if pension funds are to be forced to build lean structures and provide their services with maximum efficiency.” The manager of an Austrian pension plan says that, far from unnecessarily alarming people media reporting may not have alarmed them enough: “The demographic time bomb will be more dramatic than most people expect.”
A few (3%) have mixed feelings about reporting of their pensions crisis. One UK pension fund manager believes that “for much of the general public the alarm was unnecessary and probably unhelpful, in that it gave people one more reason for not bothering, since it would be far too expensive. But for those involved in pensions it has been helpful to have some confirmation on a countrywide basis of what their individual funding reviews were showing up.”
If a pension fund is under-funded or below the required solvency level, should the news media always report the fact? A majority of respondents (60%) say they should not, a third (32%) say they should while a small proportion (8%) say it depends on the circumstances.
The manager of a Danish fund suggests that it depends on the angle the journalist takes. “ It should be reported, but the focus should also be on the actions taken and it should be without the crisis angle, which as far as I can see very seldom is a true story.” Another comments, “Until we get a better definition of what constitute the solvency level, it can be a total red herring and very alarmist.”
A Dutch manager suggests that some explanation is needed. “The press should report under funding provided it is explained properly.” However, a Swiss pension fund manager thinks that it is not the job of the press to reveal pension scheme under funding: “Under funded pension funds should be obliged by law to disclose their gap.”
Has the pensions crisis been exaggerated by the press? Surprisingly a majority of respondents (58%) do not think so. One UK pension fund manager comments: “ For once I think this is fully justified, since the argument that says we don’t have a crisis until 20 years time really is like the ostrich burying its head in the sand”.
In theory, press reports of a pension crisis should encourage the non-saving young to subscribe to a pension. A majority of managers (58%) think this will happen. However there are strong doubts. One pension fund manager points out that, “More damage is being done by the tone of the reporting which suggests that nowhere is safe for your money. But most young people need no incentive to spend for today rather than save for tomorrow in any event.”
However, managers have their strongest doubts about the competence of journalists themselves to write about pensions and pensions issues. Three out of four managers (75%) say that, in their experience, journalists do not understand the basic actuarial principles behind pension planning. One Swiss fund manager remarks that journalists may understand “but only the very basic principles”.
A small proportion (5%) point out that not all journalists can be tarred with the same brush. A UK manager observes that “the pensions press varies enormously in its attitude and understanding of the issues,” while a Belgian pension fund manager draws a distinction between the understanding shown by different media: “Newspapers yes, television no.” Others except specialist magazines or specialised parts of the daily press.
Worse is to come. Four out of five of our respondents (80%) do not think that journalists, in general, are sufficiently qualified to write about pensions issues.
The manager of a Danish pension fund comments: “Sometimes you really worry about the qualifications in the daily newspapers. The problem is that they are working under conditions, such as time pressure, understandable texts, eye catching headlines, that do not match the conditions in the pensions industry.”
A UK manager says the problem is not ignorance but sensationalism: “The biggest barrier is not their qualifications but their (or their editor’s) desire to capture attention at all costs, leading to sensationalisation beyond what is objectively justifiable.”
And what of managers’ personal experience of dealing with the press? We asked managers who had been interviewed by the media whether they were satisfied that their comments were reported accurately? One in two (50%) say were satisfied, two in five (38%) say they were not satisfied and a one in eight (12%) say they have had mixed experiences.
One Irish pension fund manager notes that “serious misquotes have happened on one or two occasions.” As a result, a number of managers have resolved not to talk to the press in future.
The manager of a Scottish based fund perhaps speaks for many: “I do my utmost to avoid talking to the press because journalists are looking for a ‘story’ and what they don’t actually know they tend to make up. I know too many of my peers who have also found their ‘off the record ‘ comment in point, so is it may wonder we’re reluctant?”
Fortunately the feeling is not universal. It is a relief - to this journalist at least - to learn that most pension fund managers (82%) believe that they should talk to the press.