GMP equalisation: tackling the pension communications challenge

Pension Communications | Insights

Marianne Thurgood , Senior Consultant

19 Jul, 2022 · 4 -minute read

Many defined benefit schemes are continuing to work through Guaranteed Minimum Pension (GMP) reconciliation and rectification, and many may now have moved on to preparing to equalise or convert their members’ GMPs. This is a lengthy and costly piece of work, with the calculations alone taking many months or years.

It’s never too soon to start thinking about how you’ll communicate with members on GMPs. Done wrong, the communications risk causing concern – even panic – amongst members; but done right, they present an opportunity to provide reassurance, promote the value of members’ pensions and encourage wider engagement.

The communication challenges…

Technical difficulties

It’s no secret: GMP equalisation is complicated. It’s important to make sure members feel informed, but you shouldn’t blind them with science. Remember to use plain English, avoid unnecessary detail and jargon, and make use of visual aids such as infographics and animations to explain the topic in a simple and clear way. Consider using different media – digital content, video or animation, and FAQs – to supplement your printed communications.

Managing expectations

GMP equalisation can take a long time. It’s vital that your members know what to expect from you and when – and regular communication touchpoints and a timeline of events are good places to start. And timescales aside, for many members, changes to their pension will be relatively minor. By managing members’ expectations with clear messaging, you can avoid a storm in a teacup.

Decisions, decisions…

You’ll be going through a lengthy data-cleansing and calculations process, and there are lots of decisions to make along the way. Flexibility is required when planning what you’ll say to members and when; the picture can change as the data reveals how individuals might be impacted. In the early stages, you should plan for all eventualities. It’s much easier to put a communication to one side if it’s no longer needed than rush to create one at the eleventh hour.

Change management

If you’re converting GMPs, there’s a requirement to consult with your membership. As with any other scheme change exercise, this consultation has to be handled sensitively. You’ll need a means to request, gather and analyse feedback from your members – many of whom may have been receiving their pension for many years – and you’ll need to keep members informed throughout.

GMP equalisation can take a long time. It’s vital that your members know what to expect from you and when – and regular communication touchpoints and a timeline of events are good places to start

Marianne Thurgood

Senior Consultant

Delivering member communications

No matter your approach to equalisation, we recommend a series of communication touchpoints – direct communication with your members – supplemented by additional materials and resources housed online.

Sounds daunting? We can help. Get in touch to discuss the support you need.

GMP equalisation

If you’re carrying out equalisation without conversion, there’s one communication that’s absolutely key – the confirmation statement. It tells your members about the work you’ve been doing and notifies them of their new pension amount, plus any arrears they may be due.

Our approach is to develop a clear and concise statement that gets to the point and includes the ‘need to knows’ – not many members will want a War-and-Peace style complete history of GMPs. But some might. So your confirmation statement can send members away to online materials that provide the detail, such as background information, FAQs, videos or animations. Some members might not feel confident going online, so consider how you’ll accommodate any requests for this information in print form.

An optional warm-up communication a few months before your confirmation statement is a good way to prepare your members for what’s coming, provide reassurance, and encourage wider engagement. Why not use your warm-up communication to drive members to your website so they can get familiar with it, or request their email address so you can keep in touch via email?

GMP conversion

If you’re converting GMPs, you must consult with your entire membership. This is a multi-stage communication project requiring detailed planning. You’ll need to write to members to bookend your consultation period, plus they’ll need to receive their confirmation statement. And, as above, you could opt for an optional warm-up touchpoint before the consultation begins to lessen the shock factor.

The same principles apply here: there’s a fine line between making sure your members have all the information they need to participate in consultation, and providing so much detail that your members are left confused and worried, which can lead to unwanted noise. Thankfully, you can adopt many of the same good practice communication principles that you would for any other scheme change exercise, which we outline in our whitepaper Turning pension change consultations into engagement opportunities.

Make it clear to your members that you’re taking the consultation seriously. Regularly monitor the feedback that’s provided, and update your online content with responses to common questions. Many schemes find that – understandably – their retired members are easily worried about any possible change to their pension. Expectation management is so important here. Provide members with as much reassurance as you can about how their pension might change, and when.

The requirement to equalise GMPs has caused many a headache in the pensions industry. Give your member communications the care and attention they deserve, and you could well avoid another.

The perfect blend of large consultancy and agile communication agency, our 180-strong multinational team of passionate communicators have been helping pensions professionals and trustees help members feel different about pensions for over 25 years. Get in touch to find out how we can help you solve your member engagement challenges through communications.

Member engagement in the digital age

Download the whitepaper