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How DHL revamped its DC retirement communications

Insights from the Pensions and Savings Conference 2019

Pension Board and Trustee Consulting|Pensions Corporate Consulting|Pensions Technology|Retirement

December 3, 2019

Freedom and choice may give members more flexibility at retirement, but they also present them with more complex decisions. The DHL Group Retirement Plan had quickly complied with the new legal requirements, but they felt they could do more to help members, explained Lee Spithray, DHL’s head of pension trustee services.

First DHL surveyed scheme members to get a better picture of their current understanding of their retirement options. The findings cemented their decision to change their current approach.

“Our 2017 member survey showed that 55% of DC members within 10 years of retirement don’t know how they plan to use their savings. That translates to more than 15,000 people possibly being in the wrong investment strategy,” explained Spithray. “Ninety-five per cent were not aware of the annuity broking service on offer – this was a cornerstone of what we were doing previously and it wasn’t really getting any traction among people in the planning stages.”

A change of approach was needed. While the FCA Retirement Outcomes Review was not directly applicable to DHL as a trust-based scheme, it addressed many of the same problems. Therefore, Spithray and the team decided to use its findings to inform their change programme.

We felt we needed to support members more with drawdown – and we chose to facilitate access to LifeSight.”

Lee Spithray

Spithray added: “From the member survey, we saw that members liked our existing website and saw it as one of the most useful services we already had. We wanted to refresh the content and make it more accessible to tablets and mobile. We also wanted to introduce video content as an alternative medium for learning – we had used it previously for a pension increase exchange exercise and it went down well, so we wanted to do more.”

The scheme realised that they needed something more tailored to people approaching retirement. In order to do that, DHL made use of Retire Able, Willis Towers Watson’s flexible range of retirement support services. “One of the things we liked about Retire Able is it’s essentially a menu of things you can pick from,” explained Spithray. “Not everything about our previous approach was bad, but there were things that were missing. We were able to plug in the gaps and retain the elements we liked from our existing approach.”

The Retirement Outcomes Review emphasised the importance of wake-up packs. So, the DHL scheme developed a wake-up leaflet, directing DC members to the new, improved website for more information. “The content is largely from the Retire Able suite – it has been tailored to reflect our branding and we have tweaked some wording where necessary. We are sending the wake-up pack out at age 50 and again at around 55 to try to pick up people who are in the wrong strategy,” added Spithray.

Throughout the scheme’s communications, they use consistent branding to refer to the three routes of annuity, drawdown and cash. There are case studies on the website to bring these options to life: why drawdown was right for someone with a particular set of circumstances, for instance. There is also a timeline, showing what actions someone might want to take in the run-up to retirement.

The DHL scheme also introduced videos. The first is a general introduction to the website and the other focuses on retirement planning. “We were able to tailor the video with a DHL-specific voiceover and branding, but the content is largely standard Retire Able,” explained Spithray.

The scheme also developed an app that provides members with a forecast of their retirement income, shows what they have saved and allows them to check nominated beneficiaries. Further developments are planned for the next few years.

Finally the scheme already had an annuity broking service in place. They chose to keep that, but changed the way they talked to members about it.

Spithray added: “However, we also felt we needed to support members more with drawdown – and we chose to facilitate access to LifeSight. We did look at other providers, but we liked the idea of a mastertrust – which is something individuals couldn’t access on their own. By comparison, LifeSight looked like better value for members but also more understandable.”

Lee Spithray discusses how DHL revamped its DC retirement communications
Lee Spithray discusses how DHL revamped its DC retirement communications

How the Aliaxis UK Defined Benefit Pension Scheme reviewed its communications

The trustees of the Aliaxis UK Defined Benefit Pension Scheme were concerned that scheme members might be unaware of the options available to them with freedom and choice. They decided a communications overhaul was necessary, explained Stewart Patterson, a director at Willis Towers Watson.

The scheme wrote to 140 members over 55 this year and gave them access to online content, including an interactive illustrator to complement paper materials. Members were also given access to paid-for, impartial financial advice.

As a result 15 members decided to access their retirement income via transferring out. An additional three DB scheme members decided to retire and take their DB money.

“So 18 members acted where previously they probably wouldn’t have realised they had these options,” explained Patterson. “Feedback tells us members really find the illustrator very useful as it shows the numbers side by side. This brings the decision to life and it becomes a much more tangible comparison for the member to consider.”

The exercise proved a win/win for members and the scheme. The latter saved over £1m against its solvency measure.

As well as the financial benefits, running these types of exercise can have other advantages for pension schemes, explained Patterson. They can help to lower the administration burden: members are less likely to have last-minute enquiries if they have engaged with their options earlier on.

“There is also the strong paternalism argument: members typically receive better outcomes if they are engaged,” added Patterson.

Next Chapter: Paul Johnson: this could be the end of private pensions


Stewart Patterson

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Pensions and Savings Conference 2019 Overview PDF 1.5 MB

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