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21 May 2020

Reassuring pension members: how to communicate with savers about the impact of COVID-19

As strange as it may sound in the current climate, the recent fall we have seen in investment markets is not unusual. However, the reason for this market volatility, COVID-19, is different and it certainly has caused a more sudden drop than is often experienced. This is simply due to the fast pace at which the epidemic has escalated.

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That being said, any market decline is part of the long term investment cycle and shouldn’t be a reason for an investor to change their behaviour. COVID-19 shows how difficult it is to predict what the causes and timing of falls will be and when recoveries will follow. 

The longer term the view, the more important it is to invest in long term growth assets. It’s important to try to ignore short term volatility and the noise it creates.

There aren’t many investments with a longer term view than a person’s pension. With members often now staying invested during retirement, the timeline may be 70 plus years for a young pension investor. It is therefore crucial that the messages you are sending to your members are timely, accurate and helpful. We explore our tips on how to communicate with your pension scheme members during economic uncertainty.

Turn the negative into a positive

For a pension investor, generally contributions are made each month into investment funds that have specific unit prices. Whilst a fall in value causes nervousness, it does mean that any future contributions they make are in fact buying units at a lower price.

As the investment cycle works through and markets rise, the growth experience will therefore be greater – as unit prices were lower when purchased. Explaining losses this way can be helpful and makes losses less scary.

Be personal

It’s a strange time and your members are going to have questions and worries, which is why it’s important ‘you’ answer them. Your members want to hear your thoughts and advice. A personal approach to your communications on COVID-19 would offer a lot more value than standard communications that do not address the concerns of your members.

Communicating with your members using interactive webinars, personalised emails and a useful help centre hosted on your website are some of the ways you can add a personal touch. This will help your members feel that your communications are coming directly from you.

Help them to help themselves

We know pension scheme members, like all investors currently, may be feeling nervous. It’s important to provide a level of reassurance, and help them understand that some of what they are feeling is normal – but not necessarily a call to action.

Financial behaviour tells us that a loss is felt twice as acutely as the feelings associated with a rise at the same level. Once members understand that concern about losses is normal and doesn’t mean the investment was wrong, it can be easier to put into perspective.

Don’t follow the herd

It may not be the best time to communicate with your members about increasing their pension contributions or reviewing the value of their pot, but it’s just as important to make sure you aren’t just communicating with them on issues other sources already are.

Your communications during this time of uncertainty should reflect your scheme’s values and the relationship you have with your members. You will find many pension providers are offering webinars around the current rationale of their default strategy and have investment specialists on hand to answer queries or concerns members have.

Don’t repeat yourself

In an usual and unprecedented time, it can often be easy to end up repeating yourself or others when it comes to updating your pension scheme members about COVID-19. Constant updates, repeating wide spread or breaking news is unlikely to offer any real value to your members. Writing good content that is original and offers a unique perspective in the current climate is much more likely to be an effective way of engaging with your members.

This article is provided by Johnson Fleming.

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