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Getting ready to talk to members about GMP equalisation

Pension Board and Trustee Consulting|Pensions Corporate Consulting|Retirement
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By Lou Harris | August 20, 2020

Following the launch of PASA’s communication guidance, Lou Harris talks about the importance of clear communication around GMP equalisation and steps trustees should consider.

For as long as I’ve worked in pension communications (and that’s a long time!) the challenge of explaining what Guaranteed Minimum Pension (GMP) is to a member is one that I’ve tackled many times. I’ve used plain English, Crystal Marks, infographics, tables, colour coding. You name it I’ve used it. But when I reflect on my attempts, I’m certain that what really matters most to members is that I tried. I didn’t provide a long-winded page of print. I didn’t use technical terms excessively and I didn’t expect the average person without a passion for pensions (like me) to understand it (or even want to try).

When it comes to communicating very technical matters to members, putting that effort in to make it digestible demonstrates a level of care for members”

Lou Harris
Senior Director - Change Management and Communication

When it comes to communicating very technical matters to members, putting that effort in to make it digestible demonstrates a level of care for members which I would encourage any pension scheme to adopt as part of its over arching principles. GMP equalisation is one of those technical matters which deserves a level of care. Not least because, for many members, it may feel like the goal posts are constantly changing with their pension, having saved since the 1990s or before and now finding out that things might change again. Being able to trust that they can rely on their pension (and the information they are provided by the trustee) is central to the concept of a trust-based scheme. And trust in the information comes from a demonstration that someone cared to try and make this simple and easy to understand.

Guidance published on how to communicate GMP equalisation

As Chair of the Pensions Administration Standards Association (PASA) GMP Equalisation Executive Working Group – Communications Sub-Committee, I’ve recently been involved in writing industry guidance published on 4 August 2020. The 11 Microsoft Teams meetings over 14 hours with my eight fellow authors resulted in 126 hours of expertise to craft the Guide to GMP Equalisation Communications – Early Planning Stage. Given that it’s taken a lawyer, an actuary, a trustee, a few technical specialists and some communications professionals to write this guidance, this demonstrates how much care is needed. And whilst we’ve not written the communications a scheme will need to communicate to members, we have written some guiding principles, some dos and don’ts, some ready to use questions and answers and offered a checklist which should give schemes a good head start.

When to communicate

Thinking about timing, one of the areas of much debate is when to communicate GMP equalisation. On one hand there is no legal obligation to say anything until you are at the point of making changes to affected members. However, there are many reasons to communicate much earlier and in fact I would advocate that by being upfront, transparent and open as early as possible, schemes will build (or maintain) high levels of trust with members.

The context of communication is a key consideration. If a scheme is very proactive in its regular communications strategy, typically with a strong focus on education and engagement, it would be out of context to leave GMP equalisation communications to the last minute. Where a scheme’s normal approach is very little communication, then a minimal (but very simple and clear) approach would feel in context for members.

Think about the relevance of the message

In terms of messaging, we’ve developed some clear pathways to make sure that all members are given relevant information at the right stage and at the right time. Not all members will be affected directly, but there is merit in informing all members that this major exercise is underway. This demonstrates that the scheme is well run and that affected members will receive a separate communication when the time comes. In the early stages, it will be reassuring to members to know that the trustee is aware, is planning how to equalise and will keep up regular communication.

The thorny matter of tax

At the time of writing this article there is still a lack of clarity from HMRC on the tax implications of conversion on the Annual Allowance and Lifetime Allowance. Being open and transparent with members is the best approach here to set expectation, but without giving members unnecessary concern. Tell them that there may be tax implications but at this stage you can’t be specific due to the industry awaiting further instruction from HMRC. Like lockdown, we’re all in this together and in the hands of the government, so to speak, and as soon as we know we will tell you. You can also consider being more targeted in your messages as few members are likely to be at the AA or LTA limits unless your scheme’s profile is skewed to higher earners and/or long-term memberships.

We’re making communication easy

To help schemes make GMP equalisation communication really simple and easy, we’ve developed a series of ready to go templates including a simple explainer video, to take the leg work out of the core communication requirements. Of course, when it comes to conversion, which is a route many schemes are considering, each conversion approach will be different and the approach to consultation is likely to vary for early exercises. This means that consultation and conversion communication will need focused care when drafting and will need the collective agreement of a scheme’s legal and actuarial advisors. Taking the time and making the effort to communicate conversion in a way members will be able to digest and understand will demonstrate the trustee’s care for supporting members.

To help schemes make GMP equalisation communication really simple and easy, we’ve developed a series of ready to go templates to take the leg work out of the core communication requirements.”

Lou Harris | Senior Director - Change Management and Communication

Get in touch

The majority of schemes are going to look for expertise and resource to deliver this project. If you want help with planning and delivering your GMP equalisation communications, get in touch sooner rather than later so that we can help you navigate the easiest and most effective approach for your scheme and your members.

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Senior Director, Change Management and Communications

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