Investing in your member options and engagement strategy: lessons from the pandemic

04 Oct 2021

I was lucky enough to finally have a ‘proper’ (i.e. leaving the house!) holiday over the summer. This provided me with a much-needed change of scenery to enjoy alongside the more familiar British summer weather! My break gave me some valuable time to reflect on how the pandemic has impacted my family’s lives over the last 18 months or so. I’m sure it’s been the same for many others reflecting too, we’ve all been dealing with our own unique challenges – for the fortunate ones it’s been the challenge of juggling home working and schooling, while for some, sadly it’s been financial hardship or the loss of loved ones. Hopefully the worst is behind us but the shock waves of the pandemic will be felt for many years to come and for many of us the way we live our lives and what’s important to us may change on a permanent basis.  

Relating these sentiments to the world of pensions, I feel the impact of the pandemic will be especially relevant for when and how members choose to take their retirement benefits. We know retirement isn’t what it once was and it means different things to different people, but the pandemic has compounded this with those within striking distance of retirement age taking stock of their retirement benefits to see how they can best achieve the right retirement outcome. At the one end, for those who have lost their jobs or who are in poor health, this might be an immediate need for early retirement and/or cash. For others it might be about a more flexible retirement to spend more time doing what’s most important to them while they can.  

For those fortunate to have them, DB savings will be a key part of retirement planning. Indeed, across our client base we are once again seeing an increase in the number of members requesting retirement quotes and transfer value figures. A combination of large sums of money (transfer values remain close to all-time highs) and a lack of member knowledge and confidence makes the DB market highly attractive to scammers. When you add to that the impact of the pandemic and some people potentially needing to access money quickly – DB savings could find themselves firmly in the firing line.  

Interestingly, based on the results of our latest survey, it seems that the pandemic has opened trustees’ eyes to the need to review now how well equipped their DB engagement and options strategy is to protect members’ best interests. The findings of our survey are encouraging, with the headlines being:

  • The majority of DB trustees (59%) saying that Covid has increased the need for investment in digital media and technology to supplement paper-based communications; and
  • Half of DB trustees saying that Covid has led to an increased need to invest in and develop a long-term engagement and options strategy (including providing members access to a safe harbour for guidance or advice)

This is something we at Hymans have been advocating trustees spend time and budget on for many years, but I suspect the findings from our survey will have been driven by the learnings to arise from the pandemic.  

Those schemes who had already invested in digital media and tech communications will have been able to quickly reassure and communicate with their members safe in the knowledge that members could continue to make quality retirement decisions. However, those who hadn’t will undoubtedly have found communicating with members and protecting outcomes far more challenging.   

Our survey has also thrown up some interesting results on trustees offering members greater choice around how they take their DB benefits. Nearly 50% (up from 10% last year) of trustees are considering offering their members Pension Increase Exchange (PIE). 42% of trustees (up from 9% last year) are also considering offering members partial transfer values.This desire to offer members greater choice is hugely encouraging. This goes back to the concept of retirement meaning different things to different people and trustees sharing the view that members want choice to best suit their personal (post pandemic) circumstances. Both of these options also prevent an ‘all or nothing’ decision for members around their DB benefits which would apply under the standard transfer option.  

Although these results are powerful in highlighting that trustees know what needs to be done, it’s vital that this in now acted on. Without action now, we run the risk that once things revert to normal, we forget about the darker days and how vital it is that members are supported. Action now means that members will be supported for the long term and trustees can sleep easier regardless of where the pandemic takes us next! If done well, member engagement and options really is a win win. It results in better outcomes for members while also naturally helping reduce the risk within the scheme.  

If you would like to discuss your own member options and engagement strategy in more detail, please get in touch.

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