RFP QUESTION 3.9
Communicating adjustments with confidence
"Following a valuation, pensions are expected to be adjusted downwards. Please set out: your proposed communications approach; key messages to members; how you would mitigate member concern and misunderstanding; key risks (including reputational/media) and how these would be managed."
Prepare early, segment by member impact, and lead with what the change means in pounds, not percentage drops. Done well, an adjustment communication should feel like exactly what members were told to expect.
Proposed communications approach
Prepare and educate ahead of the adjustment
Before any valuation outcome is communicated, we would ensure that the groundwork is in place — core explanations of CDC annual adjustments consistently visible across the website, statements and regular communications, so that any adjustment is understood as part of the Collective Plan's design, not an unexpected event.
Segment by member impact
Not all members are affected in the same way. Communications should be tailored accordingly:
- Members receiving their pension: Clear, direct communication on the change to income and its rationale.
- Members not yet receiving their pension: Reassurance that there is no immediate impact on income, with emphasis on long-term outcomes.
- Members approaching retirement: Specific clarity on relevance, timing and where to get further support.
Clear, Trustee-led notification
Issue a Trustee-led communication explaining that a valuation has taken place, the outcome, and when any change takes effect. Use consistent messaging and tone across all channels — letters, portal, website, issued in a coordinated sequence.
Layered follow-up
Provide signposting to FAQs and website explainers. Use short follow-up content to address common questions once members have absorbed the initial message.
Key messages to members
Messages should be clear, consistent and repeated across communications, with emphasis adjusted by member segment:
- Adjustments are a normal and expected feature of a CDC scheme, designed to protect long-term sustainability and fairness.
- Benefits are targets, reviewed regularly, and can increase or decrease depending on funding levels and experience.
- The adjustment follows an independent valuation — it is not a discretionary decision.
- The Trustee acts in the interests of all members, balancing current payments with future security.
- The Collective Plan remains focused on paying an income for life, supported by collective investment and risk-sharing.
- Members should focus on outcomes over time, not a single valuation point.
Mitigating concern and misunderstanding
- Member-first framing: Lead with 'what this means for you', tailored by member status, before technical explanation.
- Context before figures: Explain why adjustments occur and how they support long-term sustainability, rather than leading with headline numbers.
- Careful statement design: Present the new pension amount first, clearly and prominently. De-emphasise percentage reductions to avoid members anchoring on the size of the drop. Use consistent layouts for both increases and decreases, reinforcing that both are expected features of CDC.
- Empathetic, calm tone: Acknowledge that changes can be worrying, particularly for pensioners, while remaining factual and transparent.
- Layered information: Simple explanations for most members, with optional deeper detail available digitally.
- Active listening: Monitor member feedback and queries following communications; issue clarifications promptly if patterns of misunderstanding emerge.
Key risks and how they would be managed
Reputational risk
Risk: Members perceive reductions as unfair or unexpected.
Management: Members who understand CDC before a valuation don't experience a reduction as a surprise. Expectation-setting starts at joining and is reinforced consistently — so when an adjustment happens, it lands as a normal part of the design, not a breach of trust.
Media risk
Risk: Negative coverage focusing on 'pensions being cut' without context.
Management: We prepare Trustee-approved key messages before any communication goes out, and ensure the public-facing website provides clear, accessible CDC context at all times. Member and external messaging are aligned from the start — so there's no gap for a conflicting narrative to fill.
Behavioural risk
Risk: Members fixate on percentage changes or react emotionally to a single valuation.
Management: Lead with the new pension amount in pounds. Percentage drops invite comparison and concern; monetary figures invite understanding. We frame every adjustment within a long-term narrative and avoid language that implies a single valuation point is the whole story.
Operational risk
Risk: Confusion from inconsistent messaging or portal limitations.
Management: Tight coordination with administrators and the Trustee Executive from the outset. Members are told in advance what they will and won't see digitally, and supporting content is ready at the same time as member communications.
Regulatory and governance risk
Risk: Communications challenged for lack of clarity or accuracy.
Management: All communications are grounded in agreed actuarial advice, with a disciplined review and sign-off process. Transparency and technical accuracy work together when the content is sequenced correctly.
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