Ireland 2015 - Construction Workers' Pension Scheme
Stylish moves to improve communication
Judge’s comment: “Better outcomes for members is what it is all about and I believe this is clearly identifiable with this trustee board and fund”
The Construction Workers’ Pension Scheme provides a low-cost pension solution and protection benefits for employees in the building and related industries across Ireland. Its main objectives are to:
• Enhance the financial security of members by providing value-for-money protection and pension propositions.
• Maximise investment returns for members taking full account of any implied risk while also considering their age profile and the type of retirement benefits they might need through a bespoke lifestyle investment strategy.
• To develop and promote the growth and expansion of the scheme through excellent administration, customer service and clear communication.
Two key areas stand out for the scheme in the year under review that aim to keep the €1.4bn multi-employer industry-wide fund at the forefront of developments in the fast-growing defined contribution and hybrid sectors.
The first refers to the scheme’s life-styling investment strategy and its decision to offer only a default option to remove the risk to the member of making uninformed investment choices and the pressure to consistently review their investment fund choices. With this in mind, the trustees have underlined their commitment to continuously improve the default options. They thus instigated an in-depth project to analyse members’ profiles and the likely options they would have at retirement.
The results revealed that the majority had sufficient savngs to take their full pension savings as a cash lump sum at retirement, if they wished. Following on from this, the existing eight sub-funds, between which the members move depending on their age and optimal risk profile, are to be increased to 13.
The scheme will carry out ongoing quarterly reviews of members’ projected fund sizes at the normal retirement age to determine which one of two different lifestyle paths they will take from age 55 onwards. If a member’s pension pot is projected to be taken as a mixture of pension and a cash lump sum, the assets will be placed in sub-funds investing in mainly bonds and cash. Otherwise, the assets will be placed in sub-funds moving mainly into cash. This innovative solution provides additional security for those approaching retirement who will take all their savings in cash, while not disadvantaging those who are looking to buy an annuity when they retire.
With a mix of passive and actively managed assets, the scheme’s investments include global and emerging market equities; sovereign and corporate bonds; cash; commodities; currencies; hedge funds; real estate; senior bank loans and venture capital. The scheme favours a mix of both passive and active management.
The next area concerns the scheme recognising the importance of engaging and communicating in a meaningful way with member, which led to a major review of the communication strategy. The aim was to develop a clear strategy for both employers and members, using positive and user-friendly language while providing better access to information. A key objective was to make each member communication document easy for members to understand, with a strong emphasis on member outcomes.
First, a Credentials Brochure was designed to highlight the services and benefits of the scheme to both existing and potential employers and members. Next, a Member Newsletter was issued in March 2015, highlighting risk benefits and urging members to review their benefit statements as part of their evaluation of the eventual income their pension will generate for them during retirement.
The scheme is currently revamping its website to promote awareness of outcomes for members as well as better risk profiling.
Construction Workers’ Pension Scheme
Founded in 2006
Hybrid industry-wide multi-employer
- Active: 19,083
- Retirees: 7,924
- Deferred: 274,570
Market value: €1.349bn
- one year: 11.1
- three years: 11.1
- five years: 7.7
- Innovative life-style investment strategy driving default only hybrid plan
- Large-scale communications and website revamp
- Broadly diversified strategy accessible through 13 member sub-funds.
- Accenture Defined Contribution Pension Plan