How to communicate changes in pension arrangements to employees following organisational changes, such as mergers and acquisitions (M&A)

Organisational changes are typically times of great stress for employers and employees alike. It is common for details to be unknown until the process is completed, leaving a lot of room for speculation. Add to this the fact that mergers and acquisitions can lead to cultural differences, higher turnover in staff and redundancies and you can see why employees typically view these changes with trepidation.

A robust and structured communication plan throughout the process is key to assuaging rumours and ensuring that the right information is communicated at the right time. Any changes to pension arrangements should be treated in the same way.

Although communicating pension changes can feel daunting, there are some simple steps you can take to ease anxiety, increase engagement and ultimately help your employees understand their options.

Focus on the facts and keep it simple

What is changing? What action do I need to take? What opportunities are there? These are the three fundamental questions that will be foremost in employees’ minds and any initial communication should address these points clearly. The key is to get the basic information out as soon as possible. There will be ample opportunity in the following weeks to provide extra detail, but it is vital to establish the facts and to stop any unnecessary or unwanted speculation.

If the change is positive, for example an increased contribution basis, this will be straightforward. When the change is more nuanced, like a move to a new pension provider, the question of how to communicate will also be more complex.

In the below example we look at how to answer the fundamental questions in this context:

What is changing?

For this question it is best to stick to facts. For example, which provider are you using, what happens to my existing pot, what will my new default investment be?

What action do I need to take?

For this question signposting is key. “You need to decide what to do with your existing pension. You can find information on your new provider, including charges and performance, here.”

What are the opportunities?

This will depend on your provider. Do they provide financial education? Do they have an app? Options for alternate investment accounts? A focus on the positive can ensure any change is seen as beneficial and considered.

Use your pension provider for onsite (or virtual) presence

When it comes to financial decision making, face to face (whether onsite or virtual) remains the most popular form of communication for all ages. Your pension provider may be able to offer support with welcome packs, presentations and even one to one meetings. The ability to talk any changes through with an expert is invaluable and employers should look to offer this wherever possible. Once again the key theme here is simplicity.

Duncan May, a Workplace Savings Specialist at Hargreaves Lansdown, has run a number of sessions over the last 12 months for employees whose pensions have moved to HL through acquisition.

For many employees, pensions can be a closed book and this lack of understanding can lead to apathy. The result of this can be drastic and can have very negative consequences for pension savers. The Department for Work and Pensions (DWP) estimates that there could be as many as 50 million dormant and lost pensions by 2050. One of the main reasons for this is moving job, starting a new pension with a new employer and losing track of the old one. The same risks apply to organisational change where a new provider is used. Lack of understanding or confusion is a key contributor to this.

Change is a great time to review

Pensions are notoriously complicated, and it can be very hard to encourage members to take positive actions. Although 80% of HL Workplace’s clients have engaged in some way with their pension, for many this means simply setting up their contribution level or getting online when they first join.

With that in mind how can we best help our employees stay on top of their savings and feel confident in their financial situation even if there is uncertainty elsewhere?

Change can be used as an opportunity to go back to basics and encourage members to think about the fundamentals. Regular reviews are such an important part of pension saving and it is an area where many employees simply don’t feel comfortable. A good start would be for employees to focus on the following:

• Contribution level – am I putting in enough?
• Investment – do my investments match my risk appetite?
• Consolidation – do I have any pots elsewhere that I have lost track of?

These questions are universal and are relevant regardless of whether your employees are 25 and just getting started or 50 and considering retirement. Your provider may have calculators and tools to help with future planning that can be shared.

Ultimately, helping employees truly understand their pension benefit will lead to a greater appreciation of what is being offered. Pension communication is an opportunity to provide support and demonstrate to employees that they are valued despite any uncertainty that may be surrounding organisational changes.