Regulator issues communications guidance

United Kingdom

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.

Please speak to your usual contact at CMS Cameron McKenna if you have any queries.