Bram van Els, communications officer at PME, the Dutch industry-wide Metalektro fund, which has AUM of €21bn
The forthcoming 1 January 2008 pensions law will introduce new requirements on the way pension funds communicate. Many people are still unaware of the amount of their pension payments, contributions, and choices and associated responsibilities.
The new regulations will not affect our communications strategy very much, as we already do what the regulations demand. If we implement the new regulations according to the letter of the law and, for example, send out telephone book-sized information to new members, they will have trouble understanding anything and consequently we may lose them. That is why we have to find a mode to operate in the spirit of the law but still stick to our goal of providing accessible and understandable information.
We communicate closely with our members in order to raise pension awareness and achieve customer satisfaction.
Our strategy to achieve these goals is to keep it simple and make it personal. A recent survey among Dutch youth revealed that they would rather spend time with their mother-in-law or go to the dentist than read about pensions. It is slightly easier to engage older people.
So we try to give our customers only tailor-made and relevant information according to different target groups, and to do that we make use of personalised printed information. We have state-of-the-art online applications which our members can log on to and simulate life events with their own up-to-date data, for example calculate what would happen if they were to retire early or work longer.
We do a lot of face-to-face communication. Our consultants are our eyes and ears and they are situated throughout Holland. They meet our members and pensioners when they need advice. And their feedback helps us to constantly review our communications strategy.
We also organise meetings - for employees, employers and pensioners - throughout the country and we send out a quarterly magazine which acts as our portal. It contains general, non-technical information about the fund as well as human interest, lifestyle, and employment stories about our sector. It aims to subtly raise interest in the subject. We also send out an annual statement of pension rights.
Further, every now and then we undertake campaigns, for example for people under 25 or women, and we send out a letter and a small gift once a member reaches the age of 35 because we think at that age certain life events - such as changing of jobs, buying a house or having children - means that they are interested in financial planning. Part of our printed material is segregated according to age and life events.
We share ideas and communication strategies with other pension funds so that we can learn from each other.
Stanislav Dimitrov, chief executive officer at pension fund management company DSK-Rodina which as AUM of BGN145m (€74m).
ecause of the lack of information from the authorities about the pension reform, all Bulgarian pension funds have an educational as well as a communications role. For example, we find that some 60% of people do not exercise their right to choose a compulsory pension fund and so are placed in a fund through a lottery-type method, which we call the ‘official distribution’.
Because of this lack of information, employers play a major role in the choice of a [second pillar] universal pension fund provider. We try to get the message across to young people that they have the right to choose within three months of joining the labourforce. But they say that they are not interested and that they would follow their employer’s advice on which fund to join because they are dependent on their employer for their income.
Indeed most people don’t know that they have individual accounts. They are only aware of the state system and are surprised when they receive an annual statement from a private pension provider. Some think that this is some sort of deposit and they come to the pension company asking to withdraw the money.
By law we must send an annual statement to our members and we have been doing that since 2003. But we realise that some 30-40% may not receive them. We get the addresses of our official distribution clients from the social security institute, which in turn has them from the declarations sent in by an individual’s employer. But employers may not give complete or correct information.
In addition, we co-operate with our main shareholder, DSK Bank, which sends a monthly statement to its clients by sending additional material in these letters. And we try to get large corporations to allow us to hold information days about the compulsory universal pension fund with their employees. However, it is difficult. Many feel it is not their responsibility and anybody wanting information should contact the pension fund. But as many people are ignorant about their membership of a fund they are not active in searching out information.
So we are attempting to get large corporates to allow us to appoint one of their employees to act as our representative and to whom we could give training in the system and the rights of individuals. This would be the best way to shorten the distance between the pension company and the customer especially for the [third pillar] voluntary fund because people have even less information about this area than they do about the compulsory funds.
The regulations also require that we publish information about our investment portfolio and its results on our website, and once a year we must detail which companies we invested in. We also have to put other important information like changes to the management body and accounts on the website and we have give a daily evaluation of the pension fund units, which represents the results of the asset management.
But this is not enough. In my opinion the pension companies and the state authorities need to make a collective information campaign to highlight the rights and advantages of the system. This could have the additional advantage of encouraging people to declare their real income. In Bulgaria many people under-disclose to avoid tax without realising this will directly influence the accumulated amount in their individual pensions account.
director of strategy and institutional client relations at Fonditel, the pension fund of Telefonica de España and several other Spanish companies, which has a total AUM of €6bn
panish regulations only require us to communicate the value of the portfolio on a working day basis. We send out a daily e-mail about the portfolio composition, the value and the performance of the fund to our beneficiaries via an automated system.
We are not responsible for sending out letters to our approximately 75,000 members; we do not communicate on a personal basis. The responsibility of distributing information to all participating members lies solely with the trustees of the board of each fund.
We hold weekly meetings with four or five people from the board of trustees and representatives of beneficiaries and retirees, basically all the people in the fund. At these meetings we talk about how the fund is performing, the main risks of our positions that we have acquired during the week and other topics. And of course we answer their questions.
The trustees and representatives then hold their own meetings with the rest of the beneficiaries in the different cities of Spain, where they again explain the fund’s results and the reasons behind them. That is why it is very important for us to keep the boards well informed.
We recognise that it is particularly important in tough periods like this summer when the markets crashed to maintain good communications with our members and explain why it happened and what we do to face the market turmoil. We see a lot of demand for this sort of information at such times. And because our beneficiaries are not specialists in the financial markets it is important to use simple language when communicating with them. Communication is important in being transparent, and the daily updates help to avoid bad surprises.
Because in essence it is just a meeting in our offices, this form of communication is not expensive. It is difficult to break down all the costs, such as the use of computer systems, but in total our communication expenses are minimal. We also have a website, where members can log to see daily value of the fund and to find strategic information and performance details.
Once in a quarter we hold a two-day conference with all trustees and beneficiary representatives to reinforce our relationship with them. As the oldest occupational pension fund in Spain we act as a benchmark for the country’s other second pillar pension funds.
Interviews conducted by Nina Röhrbein