The Pensions and Lifetime Savings Association (PLSA) has found that the first signs of the cost-of-living crisis are beginning to impact pensions and savers. Their recent survey received responses from 112 pension schemes of varying sizes and found that one in five pension schemes has seen an increase in members seeking financial guidance. It also found that, so far, a quarter of respondents have seen no change in member behaviour. That said, the full impact of rising inflation, energy bills, etc., has probably not yet been felt by many savers.
Against this backdrop then, what can trustees of pension schemes do to help the active, deferred and pensioner members of their schemes?
One option is to provide members with information and point them in the right direction in terms of help and support. Indeed, the survey mentioned above also highlights that, in response to concerns, more than a third of responding schemes have put in special measures to support their members, for instance, signposting advice on managing debt and financial well-being.
Some examples are:
State Benefits
https://www.gov.uk/browse/benefits
https://www.gov.uk/government/publications/benefit-and-pension-rates-2022-to-2023
Help with the cost of living
https://www.gov.uk/guidance/cost-of-living-payment
https://www.gov.uk/government/publications/energy-bills-support/energy-bills-support-factsheet-8-september-2022
Members and pensioners could also be reminded about winter and cold weather payments, travel concessions, possible Council Tax reductions, Senior Rail Cards and eligibility for free prescriptions
Additional information that could be included in a newsletter or other member communications could include:
- A reminder about pension scams (e.g. offers of early access to benefits). The old adage if it seem to good to be true holds good!
- Illustration on estimated retirement income of the impact of reducing or suspending contributions. Also, possible effect on ancillary benefits that are linked to pension scheme membership.
- Consideration of discretionary increase rules, bearing in mind that discretionary increases usually require the consent of sponsoring employers.
To sum up, whilst trustees cannot give advice and are likely to need employer support and additional resource in order to increase benefits, they can still offer some meaningful help to members who may be struggling with their finances in the current economic environment.
