The Pensions Regulator has just issued its latest guidance for pension fund trustees and employers, about principles for effective member communication. At the same time, it has published a sample communication for DC members choosing investment options.
The communications guidance
The guidance emphasises the importance of having a clear communications strategy, tailoring communications appropriately and avoiding jargon or legalese. The Regulator identifies four key areas for particular scrutiny: joining, approaching retirement, changes to the scheme and ongoing, "ad hoc" communications with members. The document also includes a style guide of sorts, containing a number of sample communication images and formats.
The aim is to build on the minimum requirements for member communications that are set out in the Disclosure Regulations: this is a summary of practical, rather than legal, considerations. In an echo of other Regulator statements, it puts the onus on trustees to "be prepared to challenge their advisers if it appears that a communication may not achieve what it sets out to do".
Investment guide for members
This short-form investment guide, called "Making pension fund choices - think before you choose", has been designed so that it can be issued directly to members. It was drafted in consultation with a number of industry parties, including the Financial Services Authority, and is seen by the Regulator as a tool to aid trustees and employers in engaging with members. Sample generic text may prove welcome to a number of schemes, given the reluctance of many trustees to communicate with members in this area for fear of crossing the line into providing financial advice.
Summary and actions for schemes
In the light of a traumatic week on the money markets, which is likely to have inflated members' worries about investment risk as well as trustee concerns about managing expectations, these new initiatives from the Regulator appear timely. Some emphasis on communication to DC members is also unsurprising, given the Regulator's own research and the recent report of the Committee of Public Accounts, both of which showed that governance in DC schemes remains a significant concern.
Trustees and employers will therefore want to review the Regulator materials alongside their existing communications policies. In particular, the investment guide for members could be used or adapted not only for pure DC schemes, but also for DC members of hybrid schemes or AVC arrangements.
Click here for the effective communication guidelines link.
Click here for the guide to fund choice for members.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 19/09/2008.
