Why Member communications in DB schemes matters - and how to know if you have achieved your communications objectives
It is something of a cliché to say that we live in a world of communications overload with all of us bombarded daily with a huge variety of messages on an ever increasing number of media. Sometimes, as with social media like Twitter or Facebook, we choose to participate (or not) but even if we remain aloof from these fashionable clubs we still have to wrestle with a superfluity of information, commercial offers and bewildering choices via more traditional channels. Given this media explosion those of us connected with the world of Pension Funds can perhaps reassure ourselves that we are much more modest in our communications activities with Fund members. This is changing with new disclosure regulations coming into force and certainly the world of communications for DC schemes is becoming more complex and challenging. But for DB schemes it is different. The average Pensioner member of a Defined Benefit Pension scheme will perhaps get one formal communication a year from the Fund plus, if he chooses to ask for it, a copy of the Fund’s annual report and other standard material. Actives will also get regular statements which record their individual pension position plus, perhaps, invitations to subscribe to AVCs. In addition some funds have websites and webcasts – mainly for Actives - but that’s about it. Is this sufficient and should DB schemes’ Funds be doing more – and how do they know if their communications are achieving the Fund’s objectives?
One of the core principles of communications can be summarised in the shorthand “Stimulus and Response”. In short every communication that anyone issues requires a response and should be designed to elicit that response. So, for example, an advertisement from a Motor Car manufacturer (the stimulus) will generally be seeking the response from the target group it is aimed at of being put on the short list of possible cars that the purchaser will consider. Responses can also be more passive and subliminal. Corporate Advertising responses are usually measured over time to see if a company’s reputation among its target group members has risen as a result of the advertising. The key word here is “measured” – where communications are required to elicit something other than a purchase (where hard sales data will tell you if you are succeeding) then you have to find a measurement mechanism to tell you if you are being successful.
Most communications with members of DB schemes are not designed to achieve an action response – i.e. the Fund members are not usually required by the Fund to do anything directly as a result of receiving the communication. Funds communicate with their members to inform them and to reassure them – especially to try and demonstrate to them that the Trustees are protecting their interests. There is also, of course, the statutory responsibility that all Funds have to ensure that key data about the Fund, and any material changes that have been made to the Fund, are properly communicated. So how can Trustees know whether their communications are being effective – in other words that the stimulus that the communications represent are achieving the desired response? The absolute necessity here is to measure this and to track it over time. Two research methodologies can help us. Qualitative Research digs deep with members of the target group to identify their behaviour and opinions – one-to-one interviews and focus groups are typical ways of doing this. The respondents are selected randomly from the population but it is common to have different groups for each subset of the population that are of interest – different age groups or genders for Pensioners for example. Qualitative Research gives you a feel for attitudes and opinions but it does not give you statistically significant results. For this you need Quantitative Research in which samples are much larger but which ask less potentially discursive questions. A sample size of around 400 might be typical in a DB scheme which wants to know the effect of communications on its say 20,000 Pensioner members.
So after creating the stimulus we measure the response and the final step is to complete the feedback loop by refining the communication in future. So, for example, if one of the communications objectives is to try and ensure that all Fund members are aware of the “funding ratio” of their fund and why it is important then Quantitative Research will tell you statistically whether you are succeeding and Qualitative Research will help you understand why – and help you improve your communications next time around.
Paddy Briggs is a Member Nominated Trustee Director of the Shell Contributory Pension Fund. He writes in a personal capacity and the views he expresses are his own.
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