How can pension funds get their message across to members and pensioners in this fast-moving digital age? Gail Moss gives an overview
At a time when much of the news coming from Europe’s pension fund industry seems to be bad, it is vital that pension funds have a well-thought out communications strategy.
According to Richard Ascough, communications consulting manager at the UK pension fund consultant and administrator Capita Hartshead, the strategy should be long term and cover more than one issue, for example, planned benefit changes.
“It should be a plan for the next three to five years, allowing funds not only to focus on key events and issues over that period, but also to build up trust on the part of members,” Ascough says. “Remember that a good communication strategy can help build up the trust of employees, so if there is any bad news in the future, it is less likely to be badly received.”
Whether the communications function is run in-house or externally, a strategy is more likely to be successful if it is created and monitored within a formal structure, such as by a sub-committee of of the board.
The golden rule with communications is, know your audience. Given the diversity of age, length of service and career pattern of workers and retirees, a one-size-fits-all message is not as effective as personalised contact. And messages need to be relevant, otherwise they get ignored and affect the credibility of future pension fund communications.
By splitting members into different groups they can be sent the right message when key events occur, for example: ‘join the scheme now’ (for new employees, in a non-mandatory scheme); ‘are you paying enough in contributions?’ (for employees who have been members for several years); ‘how will marriage affect your pension?’ (for newly-weds); and, ‘have you got the right investment mix?’ (for DC scheme members who are, say, 10 years from retirement).
The data for segmentation can be provided by the scheme’s administration department, and the employer’s HR department, which possess a wealth of information on members.
Finally, stick to another golden rule: keep it simple.
Build or buy?
Is it advisable for a pension fund to build an in-house communications team or buy one from outside? The decision will often depend on the fund’s size and resources; a large pension fund is more likely to have the resources to employ staff in-house, whereas a small- or medium-sized fund may have no choice but to outsource.
Bram van Els, founder of the Dutch PR and communications consultancy Backscratch, says that it is sensible even for bigger funds to outsource part of their communications function because it will bring in a fresh pair of eyes.
“Pension funds tend to be infected by their working environment - for instance, while their staff think pensions are a easy to understand and exciting, many in the public think they are extremely complicated and boring,” he says.
A good communications agency will be able to offer both creativity, for example, making eye-catching and easy-to-read letters and e-mails, as well as technical pensions expertise, while still providing value for money.
A further benefit is flexibility. Pension funds have to a large extent become subject to events beyond their control, such as the global financial crisis, and if all the responsibility for communications is shouldered by an in-house team, staff may have to cope with unexpected spikes in the workload. Outsourcing some of the work can help smooth out those sudden demands on staff.
Similarly, even large pension funds can feel they are too close to the message and have problems getting it right, so using external resources can act as a sounding board in conjunction with the in-house team. And if the project is very large and drawn out, an external agency can undertake the project management.
However, no-one knows the workforce better than the employer, so any outside communications agency will need a large amount of information from the pension fund. And where an employer already has a significant communications resource (such as in-house design) it may make sense for the fund to manage the communications itself.
Importantly, whether communications are wholly or partly managed in-house, it is vital to designate someone to be responsible for them, says Sally Ling, communications specialist at GR Communications. “Otherwise, it becomes ‘someone else’s job’ and gets neglected,” she says.
Do I need a new media strategy?
In an age when even governments and political leaders are on Twitter, it is easy for pension funds to think they have to plunge into every social media channel that exists in order to get their message across.
“Schemes often get hung up on methods of communication, but the most important thing is the message - it has to be right, relevant and concise,” says Ascough. “New media channels do make it easier to communicate with members. But different members require information in different ways.”
Furthermore, the medium has to be appropriate to the message: most Facebook users are not constantly on alert for a message from their pension fund. And some companies do not allow employees to access Facebook or Twitter at work.
At a more fundamental level, many scheme members may not even have access to computers, at work or at home.
So for most pension funds the ideal solution will be to use e-mail, the internet and text messaging in combination with more traditional methods, such as personal correspondence and magazines, poster campaigns in the workplace, and face-to-face meetings and seminars.
For instance, personalised e-mail messages to specific sections of the workforce at key points in their membership can be very effective, while the traditional annual benefit statement letter can bolster these.
Whatever the format, the message needs to attract attention by using colour, punchy headlines and personalised information and/or questions. For instance, e-mails can include links to websites or articles of interest to the member.
Messages can also be tailored to the workforce. For example, more then 80% of the members of Pensioenfonds Zorg en Welzijn, the pension fund for the Dutch healthcare and social work sector, are women. The fund’s magazine includes articles on human interest, travelling, lifestyle, as well as pensions. Sometimes these topics can be combined, in articles such as pensions and divorce.
As with a website (see box), it is important to get feedback on which types of communication members prefer.
New media really come into its own in limited campaigns or debates - for example, a forum on Facebook, or a chatroom where members are encouraged to discuss a topic, such as worries about their financial futures. Debates can also be stimulated by blogs from key members of the pension scheme management.
These tools not only help raise awareness among members in a user-friendly way, but
also give the scheme useful feedback on
Managing crises and bad news
When there is bad news to be broken - for example, the reduction of scheme benefits or the switch from DB to DC - members should be told as quickly as possible.
“If you send a well-written letter informing members that their benefits are being reduced, they may say, ‘I don’t like this, but I understand why the fund is doing it’,” says Ling. “But if, before they get the letter, they hear something in the press, it’s much harder to win them back - that is the power of the press.”
Ling advises giving members constructive proposals, rather than giving the impression a scheme has something to hide.
An efficient call-handling system should be organised to ensure that members phoning the scheme are put through to people with the information to help them.
Only designated spokespeople should talk to the press, and they should be given agreed ‘lines’ on specific topics. The pension scheme and employer should work closely on this, since the press will contact both parties. “Otherwise, someone who doesn’t know how to handle the media may refuse to talk to them - or tell them too much,” says Ling.
And do not neglect forward planning. Crises can blow-up overnight. Paper stocks and mailing facilities should be in place in case a letter has to be hurriedly despatched.
Public risk appetite
Increasingly, a key goal of pension scheme communications is to give members more realistic expectations of what their pension income will be when they retire. This is particularly true in the Netherlands.
“The Dutch public correctly believed their pension system was the best in the world, but now they incorrectly feel it is all gone, and there is a sense of panic,” says Van Els. “There has always been this myth that nothing is safe in life except pensions, and pension funds have not tried hard enough to defuse this.”
Alfred Kool, partner at pension communications specialists Kool Baas & De Queleri, says: “People understand and accept risk in other areas, such as real estate, but they expect their pension fund to be 100% safe. We still have to explain to people that risks are a part of life. Pension funds need to start talking about longevity, and working longer for the same amount of pension.”
Educating the public is a huge exercise requiring the participation of governments, pension providers and other parties. “As people have partly lost their faith in pension funds, it is more difficult for funds to get serious messages across,” adds Kool. “Lack of trust is an extra hurdle when you want to be transparent.”
But individual pension funds can help by explaining to members about the concept of risk, how pensions work and how they are still the best way to save for retirement, in spite of the risks.
“My experience is that a face-to-face meeting with members helps schemes to listen to their worries and anger, and is a way to start a dialogue,” says Van Els.
“It is difficult for the really big schemes to contact everyone, but if you have a handful of people in a meeting, they will then talk to their colleagues and friends. This can then be used in combination with the internet, as well as by correspondence. Be proactive; don’t just sit and wait for a crisis to happen.”
Again, the key here is to be honest and transparent - even though the initial reaction may well be to lower confidence.
“The Dutch have a saying that you have to bite through the bad apple first,” says van Els. “You have to go through this phase to create a basis where confidence will be raised again.”