Most people who read articles about pensions earn their living from pensions – managing the benefits or the investments, setting the things up or closing the things down.
Most of the people who benefit from pensions do not (sadly) read this blog. Although those of us in the pensions industry talk about “engagement” with pensions, typically we want the participants in our plans to engage with their pensions on our terms. We don not want people writing in to us telling us we have done a rubbish job at protecting them from the stock market upheavals. Nor do we want them phoning up to complain that they are getting half of what they were expecting based on historic projections. Nor do we want them questioning why one of their mates got a better annuity deal than they did by shopping around.
Those kind of behaviours are not what we want at all.
So what happens if you run a pension scheme for thousands of people and you need to make changes. Recently, one FTSE 100 company managed to make important changes to their largest scheme by getting over 98% of their total workforce to vote for change. They achieved this by getting all the affected staff in meetings and encouraging them to say what they really thought.
Then they wrote down all the questions (verbatim) and produced a massive document. Every question was answered and the answers circulated as a true and honest account of what had been asked and what the company’s response had been.
The unions that represented the staff called the company’s behaviour exemplary, instead of calling the members out on strike, staff are being encouraged to think of their employer as responsible , responsive and reasonable.
In this case the employer and the unions deserve much praise, but most praise goes to the members who bothered to turn up to the meetings, to ask questions, to read the answers, to vote and to continue to press for information that will enable them to plan to make sure they get the pension they hoped for. This will involve them having to sacrifice some immediate income for a better income later on.
The Pension Regulator published last year a document listing six things a company could do (either directly or via its pension trustees) to improve the pensions their staff got. Some are obvious pay more in… others less obvious;- reduce charges, improve at retirement decision making and make sure people make sensible investment decisions.
The Regulator’s emphasis is on the company and the trustees to do this for staff. The Regulator doesn’t talk much to staff themselves. Public awareness of what makes for a good pension is woefully low as I’ve found out through some work I’m doing with the owners of what are now being called micro-employers (small businesses as were).
However public awareness that there is a difference between a good and bad pension is pretty well universal. It’s “outcomes driven” as the Regulator would say. Put in the language of everyday people a good pension is a pension that pays a decent income in line with what is expected and a bad one is the other way round.
Given that people know that pensions matter and that the way the pension is set up decides the quality of pension received, it’s sad that not more pressure is being put on employers and trustees to make sure the pension plan set up for them, is doing its stuff.
The experience of the company I mentioned earlier in this article suggests that if an employer really does want a free and frank discussion with its staff, staff will respond. The lesson I’ve learned by being tangentially involved in that consultation is that employers can create the conditions for engagement but to ignite the debate there needs to be more. In this case there was strong leadership , principally from the unions but there was also a strong grapevine between employees who were organised and able to work things out between themselves using new technology such as electronic forums.
Perhaps we’ve missed an important change in the way that organisations talk within themselves. The old top-down strategies where information was delivered from on high through “desk-drops” and employee mailings is yesterday’s news. The news is that employees chose to talk with each other, compare notes and take collective decisions on things as varied as the Christmas lunch to their reactions to pay rises.
Employers who try to control this process really are on a hiding to nothing. Ultimately these social networks are the new unions and those who chose to moderate and deliver the feedback are the union leaders of tomorrow. The wisdom of the crowd is not something that CEO’s can mange through Human Resource and PR departments. Turn that round, PR and HR departments will increasingly need to tap into the new networks however they might develop.
Pension people like myself have to adapt to the changes and accept that we need to present ourselves to these new networks as trusted experts and to win their recognition on their terms not because we have some job title.
Would you be comfortable to set up a Facebook page for your staff to comment on your company‘s pension arrangements, or a linked-in group? Would you be comfortable enough to ask your staff how they’d like to talk with you and with what level of anonymity? Judging by what I’ve seen recently – perhaps you should.