Financial Education Project

Employer keen to raise understanding of retirement savings within its workforce. Members of the DB scheme had not received a statement of benefits since the Scheme closed 15 years earlier. Employer wanted to identify deferred members who may be interested in early retirement / transfer options.

The Trustees wanted to engage more with the members of the Scheme, and in doing so capture up-to- date member personal details such as home address, marital status, email, etc.

Rather than a one-off exercise, the employer was keen to deliver regular financial education exercises, to be consistent with the company’s paternalistic approach.

Stage 1

• Benefit statements (with normal retirement projection / transfer value) issued to 20 deferred members over age 55.
• Letter highlighted freedom and choice legislation and offered an initial consultation with local financial adviser, at no cost / obligation.
• Form included (reply paid envelope) asking members for up to date personal details.
• Great engagement (80%) achieved with replies received from 16 of the 20 members.
• 4 members transferred out, transfer values totalling £1.4m, reducing scheme funding deficit by approximately £0.3m.

Stage 2

• Over 20 deferred members (mostly over age 50) invited to attend 1 hour presentation to meet the Trustees and hear about the workings of the Scheme.
• Plain English presentations covering basics of state, DB and DC pension schemes, funding update, explanation of benefits available at normal and early retirement and on transfer. Strong message that transfer out is usually only suitable for a few members.
• Details of DB Scheme presented by Scheme Actuary, company’s DC pension plan presented by financial adviser.
• 12 deferred members attended followed by 20 employees (with DC only benefits) attending a follow up presentation on the Company’s DC pension plan.
• 2 members transferred out, transfer values totalling £0.9m, reducing scheme funding deficit by approximately £0.2m.

• Far greater understanding of the DB and DC pension schemes by the members.
• Face-to-face contact between Trustees, Scheme Administrator and members, with up to date member personal details obtained.
• Members offered high quality independent financial advice, at no cost.
• Employer sees funding improvement from a few member transfers.

Quote from member: “I thought the presentations went very well this morning, were very informative and certainly make life easier in terms of deciding upon retirement options.”

Quote from MD: “My staff and ex-employees were very appreciative of two excellent presentations. We will repeat this exercise next year.”