In these extra-turbulent times, we wanted to know how keen members were to remain abreast of their pensions and how schemes were adapting, if at all, their communications policies to ensure members understood the risks they are taking. We asked for your views.

An overwhelming majority of respondents to this month’s Off The Record survey either sent statements quarterly or annually. A handful sent communications of some sort twice a year - often a mixture of annual statement and six-monthly interim news bulletin. Just over a third of respondents communicating only on a yearly basis are DB funds. The remaining 64% DC or a variant.

For the majority, the statements are designed to provide general information about the value of individuals’ pensions, the performance, and to discuss the scheme’s funding level.

“We have an annual statement we send out to inform about contributions, the fund’s performance and any normative changes,” says one Italian scheme. “We run a scheme with both a DB and DC arrangement,” a UK scheme comments. “So we talk about the performance of the scheme as a whole then for the DC members, we inform them of the state of their personal accounts and for the DB members, we report on accrued benefits and funding levels.” 

Communication is an area that has come under scrutiny in recent troubled times and IPE was keen to find out how well members were informed and how much effort they made in finding out what impact the current financial crisis had on their pensions savings.

None of the DB schemes has sent out extra statements or tried to inform members of any changes made to the scheme. This reflects the fact the members take no risk in a DB scheme - although they may still not get a pension if the sponsor goes under and has nothing in its coffers to pay its debtors, of which the scheme is one. 

For the DC schemes, there are two important aspects to note. First, the vast majority of schemes have taken steps to keep members informed of any changes they are planning to protect against the downside.

And 75% saw a rise in enquiries by members. “The purpose of recent targeted communication was to manage expectations and offer some comfort from recent press coverage of the current market situation,” says the pensions manager of one Dutch scheme.

Schemes that have drafted specific targeted communication about the current crisis mainly communicated electronically. “We sent an email before sending the regular benefit statement explaining that the market was very volatile, but our recommendation was not to make any hasty or rash decisions,” another scheme explains.

“Our response was to confirm to members that they have no investment choice in our pension fund and therefore we are not at liberty to switch their investment from the current fund,” another scheme admits.

One German scheme says: “We have sent out a statement about planned changes, investment returns and funding ratios. And for individual member enquiries, we have established a central hotline where our scheme advisers are on hand to help.”

Given the different ways schemes approach their communication policies, we asked if a European-wide code of practice for pension schemes would help. Of the schemes that responded 51% were against and 49% were for it.

For some, the code would ensure standards did not slip. “A code of practice would be a definitive benchmark for good governance relating to communications,” says the pensions manager.

“We could all learn from best practices from others without them being limited to national boundaries,” adds another.

For others, a European-wide code would make life for cross-border schemes and transient workers much easier.

But for others, a code represents another layer of needless bureaucracy. “We should avoid over-regulation and first concentrate on harmonising taxation and rules for schemes across Europe,” says one German scheme manager.

Others thought the differences between schemes would make a code practically impossible. “Different schemes and different countries have different requirements,” argues one Dutch manager. “No-one size fits all,” concludes a Czech fund. 

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