A growing number of defined benefit (DB) pension plans are shrugging off their inhibitions and baring all—strategy, objectives, targets and even investment results. Whether it’s an annual member report, a special edition of the company newsletter or an annual member meeting, more and more plans are recognizing and responding to their members’ desire for greater information about their plan’s governance structure and financial status.

Why open your plan up to greater scrutiny, especially when the law doesn’t require it? The answer lies partly in an increased focus on disclosure, but there’s more to it than that. Truth and transparency are the basis of trust, and trust goes to the very heart of the DB model.

Members and pensioners trust you to preserve the pension promise. Other stakeholders—be they unions, participating employers or company shareholders—trust you to govern the plan effectively so that it provides meaningful, sustainable pension benefits. Transparency is a powerful tool for building and cementing that trust, particularly in these times of financial and economic uncertainty.

The reality is that most pension plans are carefully managed and monitored, with decisions made on the basis of well-structured, well-documented processes. As a result, most plans have little to lose and a great deal to gain by telling members how decisions are made and by whom, which experts are consulted, and—most importantly—what plan management can control (such as investment policies) and what it can’t (such as interest rates and global markets).

Demonstrating Leadership and Good Governance
On at least an annual basis, you should be telling your stakeholders what your plan hasdone, is doing and will do to protect their interests. Done well, your reporting will:

• Engage your stakeholders;
• Explain results in the context of obstacles and opportunities;
• Address tough issues honestly and openly;
• Outline strategies to enhance performance, mitigate risk and add stakeholder value;
• Put plan funding in perspective;
• Reinforce key values and branding; and
• Demonstrate leadership and good governance.

Safeguarding Stakeholder Trust
Of course, how you present the information to your stakeholders is key. Unless you take pains to remove actuarial and investment jargon, explaining complex concepts in simple terms, your efforts will only serve to reinforce the knowledge gap and undermine your objectives.

Regardless of the medium you choose—be it Web-based, paper-based or in person—the point is to interpret the information and make it meaningful to your plan members. This requires employing basic techniques such as using clear, descriptive language; incorporating meaningful charts, graphs and examples; and including at-a-glance tables and highlights.

Experience shows that the payoff is worth the investment. Plans that go the extra mile and divulge what goes on behind the scenes typically see an increased appreciation for a valuable benefit, enhanced understanding of complex issues, support for tough decisions and renewed confidence in the plan’s leadership.

The bottom line is, it’s all about safeguarding one of the DB pension plan’s most important assets: stakeholder trust.