The Pensions Regulator says, “trustees are the first line of defence in protecting savers and have a key role to play in ensuring savers make informed choices”. So, what can trustees do to help educate and inform people in difficult times?
Give some reassurance
Important messages delivered in the right way can help reassure individuals:
- A pension is a long-term savings vehicle and there will inevitably be periods of significant short-term market volatility. There’s no guarantee but historically markets have recovered and gone on to provide positive returns over the longer-term.
- As the price of equities falls, contributions will buy more fund ‘units’ and be beneficial – assuming of course, markets rise again in the future.
- Many people will be invested in a scheme’s default option, holding a variety of investments. By spreading investment across different types of assets and markets, it can help reduce any negative impact resulting from market volatility.
- The ‘life styling’ approach of most default strategies can help smooth some of the more extreme market fluctuations for members getting close to retirement. It’s key to remind individuals that under pension flexibilities, they don’t have to take their pension savings all at once and might want to keep some or all invested.
Make it personal
Tailoring the message to different age groups where possible is best – a person 20 years from retirement will have very different priorities for today, tomorrow and ‘one day’ to those nearing retirement. Targeted messages ensure people receive the most relevant information to them, at the right time and in the right way.
Make the most of all the communication channels and delivery methods available – webinars, member websites, (personalised) annual benefit statements and newsletters for example.
Help minimise the risks
Disappointingly, there’s been a rise in pension scams as a result of Covid-19. It’s vital to urge individuals to be more vigilant and exercise extreme caution - signposting trusted sources of information wherever possible. Individuals might be more vulnerable to scams if their financial position has worsened during the pandemic, so a more holistic approach to financial wellbeing, with practical help on where to go for advice, is best practice.
Trustees are in an ideal position to provide clear, reassuring and simple communications to their scheme members. They can highlight the importance of taking appropriate advice if an individual is thinking about making any financial transaction or investment decision, the timing of which could be potentially devastating during a worrying time for all.
This article was featured in Pensions Aspects magazine September edition.
Last update: 19 January 2021