Pensions Talks Interview: Gareth Jones, Director, SEC Newgate UK

This month, our very own Gareth Jones, Communications and Advocacy Director, shared his perspective on some of the most pressing topics in pensions communications — from reputational risks and regulatory changes to proactive strategies for effective engagement.

1. How have pensions communications evolved in recent years?

It’s fair to say that pension schemes are now receiving far more scrutiny than previously. This is partly because of technology and online communications and partly because of regulatory changes and political interventions in the pensions sector. Both of these present some clear communications risks for pension scheme trustees, sponsors and advisers and can have a significant impact on their reputation. This ultimately means that communications issues need to be fully factored into scheme risk planning at the earliest possible stage.

2. What are the biggest reputational risks pension schemes are facing? 

There are a number of reputational risks that any pension scheme could face, but if I was prioritise the key ones, I would say those associated with (1) administration and security issues (including systems failure, large-scale admin errors, cyber-attacks and fraud); (2) investment risks, including instances of during times of market turbulence, liquidity risk and political risk associated with investing in certain assets (LDIs being a clear recent example); (3) covenant risks, which remain a clear focus for DB schemes – even though large deficits are no longer common, the viability of the sponsor continues to remain a key concern and (4) political and policy risk, as government increasingly views pension funds as a tool for its broader investment objectives, its interventions could have profound consequences for individual schemes. 

3. How can pension schemes proactively manage and overcome these challenges?

The handling of the above risks can have a significant impact on trustees’ reputation, so it is important to identify and anticipate them as much as possible and establish ways of mitigating and minimising them and any impact on the scheme members. While communications issues tend not to be the starting point for any pension scheme risk - if handled badly, they can greatly exacerbate the potential damage. For instance, not handling media scrutiny or enquiries in an appropriate way risks causing confusion, misinformation and public criticism. Our recommendation for pension schemes, therefore, is to prepare for these communication risks by identifying the likely risks and ways of responding and establishing key protocols for handling media, social media and public policy stakeholders. This could be done through developing an agreed manual or ‘readiness pack’, which pension scheme trustees and advisers work from in crisis situations.

4. With major regulatory and policy changes affecting pensions, how should companies communicate them effectively?

The government’s proposed pension reforms, as outlined in the Pensions Investment Review and the Chancellor’s Mansion House statement, potentially represent some of the biggest reforms in decades. These reforms contain a number of details but essentially the government wants the pension sector to take a more active role in investing in the UK economy and appears intent of pushing through important legislation on this in the coming months. It will clearly be a challenge for pension schemes to balance this overriding objective with the interests of scheme members and savers and the trustee’s fiduciary duties (some industry representatives will be quick to point out that schemes exist to serve the interests of their members and secure their retirement – and are not there to save the UK economy).

In terms of how the pensions sector responds to this, it will depend on what part of the sector they are in (DB, DC and Local Government schemes all have their different challenges) and also whether they view the key reforms as an opportunity or a threat (e.g. the mandated consolidation of DC master trusts or local government pooling, or the reforms to DB surpluses). In any case, engagement will be key. Ensuring that government understand the impact this will have on scheme members will be crucial throughout this process. 

5. What are your top three recommendations for pension schemes in delivering their communications and policy programme?

Prioritise communications - understand that communications issues need to be fully factored into scheme risk planning. Be prepared for a range of risks and outline the likely responses to key audiences and stakeholders. Engage early – upcoming government reforms are likely to be profound so it will be important to ensure your voice is heard before legislation is implemented