10. DC Code – Member communications
Trustees should ensure that member communications are comprehensible, accurate, and
address the needs of the members.
Introduction
This code of governance (DC code) is issued by the Pensions Authority (the
Authority), a statutory body set up to regulate occupational pension schemes. Part of
the Authority’s mission is to support pension scheme trustees and the public through
providing guidance and information.
One of the functions of the Authority under the Pensions Act is to issue guidelines on
the duties and responsibilities of trustees of schemes and codes of practice on
specific aspects of their responsibilities. The DC codes provide practical guidance on
the requirements of pensions legislation. They set out standards of governance
expected of those who must meet these requirements. These are intended to assist
trustees and supplement the Authority’s Trustee Handbook; however, they do not set
out all of the trustees’ compliance obligations.
Status of code of governance
This DC code is not a statement of the law and there is no penalty for failing to
comply with it. It is not intended to prescribe the process for every possible scenario
but is likely to indicate behaviour, activities and control processes that are most likely
to deliver good member outcomes. This DC code sets out the Authority’s view of
good practice in this area. Any alternative approach to that appearing in this code of
governance will nevertheless need to meet the underlying legal requirements of the
Pensions Act and Regulations, and a penalty may be imposed if these requirements
are not met.
At whom is this code directed?
This DC code applies to trustees of all DC occupational pension schemes. How
trustees apply this code should be proportionate to the size, nature and complexity of
their scheme but trustees should always remember their duty of care to act in
members’ best interests.
DC Code – Member communications
The Authority expects that trustees will ensure that scheme information is accurate,
clear, simply expressed, and helps members to make informed decisions about their
investments, benefit options and contribution levels. The more effective the
communication, the more likely it is to attract members’ attention and encourage
them to engage with their savings. Clear information helps members to make
informed choices.
Part V of the Pensions Act, together with the Disclosure Regulations impose
obligations on trustees to provide large amounts of information to members, some
automatically, others on request. This includes general information about the
scheme, such as that contained in the scheme’s annual report and governing
documents, and personal information such as that contained in the annual benefit
statements provided to members. Trustees must also provide information to
members when specific events occur such as:
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when a member joins the scheme;
when a member leaves employment and / or the scheme;
on the granting of a Pension Adjustment Order in relation to a member’s
benefits;
on the death of a member;
when a retirement benefit becomes payable or is about to become payable;
on any proposal to materially alter the scheme; and
on the winding up of the scheme.
The production of ‘user friendly’ disclosure material and meeting legal requirements
should not be deemed to be mutually exclusive. The focus should be on effectively
communicating with members and not solely on meeting legal disclosure obligations.
Trustees should consider what is the most effective approach for communicating
with members, taking account the profile of members and how likely members are to
understand the communications. Trustees should consider the role of technology in
promoting member engagement. A useful approach may be to join forces with the
employer/HR department as very often employees look to these sources for
information. For example, trustees could consider the use of an employer’s online
platform to combine information about the pension scheme and related HR matters.
Whilst the actual production of scheme/personal information may be a task
delegated to the scheme administrators, trustees should bear in mind that they
remain accountable for any communications issued on their behalf. They should
convey their communications objectives to the administrators and review draft
communications issued on their behalf.
In developing a communications programme, trustees need to ensure that:
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communications avoid the use of jargon and technical terms where every day
words can be used instead and that the language used reflects the financial
literacy of the membership;
the information provided is clear, understandable and addresses the
members’ needs;
the information is presented in a way that is easy to read, is layered and
highlights key information;
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members are regularly informed that their level of contributions is a key factor
in determining the overall size of their retirement fund and members are
encouraged to check whether they are on track to meet their retirement goals;
members are informed of the options to increase their level of contributions
and there is a clear point of contact through which they can make any
necessary changes;
members can understand the investment options available to them, the
strategy they have selected and the default investment option selected by the
trustees;
costs and charges incurred by members are clearly disclosed; and
benefit options are presented simply and clearly to facilitate members in
choosing the route best suited to their personal circumstances.
Trustees could also consider supporting members by providing access to
independent financial advice, or at least providing details of independent financial
advisers that would help them make decisions appropriate to their individual
circumstances.
DC code:
Member communications
Source
Part V of the Pensions Act and the Occupational Pensions Schemes
(Disclosure of Information) Regulations, S.I. No. 301 of 2006
Trust Deed and Rules
Pensions Authority Model Disclosure documents
Action
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Consider the profile of the membership and develop a
communications plan to meet the needs of members.
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Regularly remind members of the importance of reviewing their
investment choices.
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Regularly remind members to review the adequacy of their
retirement savings.
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Use plain language as far as possible and avoid using jargon and
technical terminology where everyday words can be used instead.
Explain any technical terms clearly.
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Consider the role of information technology in meeting the
objectives of communication.
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Consider provision of access to independent financial advice for
members.
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Consider including the quality of member communications on the
scheme’s risk register.
Monitoring
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Respond appropriately to feedback from members regarding the
quality of communications.
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Review the effectiveness of the communications plan annually.
This could be carried out by surveying a sample of the members.