Defined contribution (DC) plan sponsors in the U.K. might agree that better communication with plan members is integral to the plan’s success, but most lack a communications policy or don’t implement the one they have, according to a survey.
Mercer’s latest DC survey of 354 U.K. plan sponsors finds that while 68% of respondents rated “limited member understanding” as a top challenge—and almost 90% are looking to improve member education and understanding in the near future—more than 60% have no communications plan or have failed to implement their existing plan.
“The findings highlight the real difficulties employers face when running a DC scheme,” says Trevor Rutter, a senior consultant in Mercer’s workforce communications business. “Employers know what success looks like, yet there is a dichotomy between employers’ objectives for their plan and reality. Despite realizing communication is central to a successful DC scheme, companies seem to be struggling with actions to get this going.”
For example, one of the top success factors identified by plan sponsors in the survey is “being valued by employees” (78%), yet only 16% believe they have been successful in ensuring that this is achieved. The survey also found that 34% of plan sponsors have no formal objectives for their DC plans, and 46% have no defined success measures.
Rutter points out that effective communication doesn’t have to be complicated, and holds up the recent movements of stock markets as an example. In the event of a drop in investment values, a good communications plan could use a simple member alert explaining the long-term nature of pension savings, simultaneously calming member fears and increasing understanding.
“In many cases, to maximize the benefits of a DC plan’s communication, we just need to make use of information we already have,” he says. “Data on member choices and behaviours can be used to provide communication that is timely and targeted to suit the membership demographics. As this is the time of year when many DC plan members will be receiving their annual benefits statement, why not give some thought to using this as a vehicle for personally targeted messages at little additional cost?”
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