BeFrank has issued the Uniform Pension Statements (UPOs) to its members for 2012. Although we have a statutory obligation to do this by 1 October 2013, we choose to comply as early as possible in the year because that is when the information we provide is most current. If you’re aiming to increase pension awareness, the information you are providing needs to be relevant. However, there is still a question: Does the UPO actually have any relevance? For some things, yes, it does – but as far insight into the retirement pension is concerned, definitely not.
We were questioning the value of the UPO to members of defined contribution schemes as early as last year (see also the Dutch-language article “Is de UPO bij een premieovereenkomst wel zinvol?”). Fortunately an important section of the UPO has been amended this year. For example, the actuarial rate of interest for pension accrual has been adjusted downwards by 40% to 2.4%. This is closer to reality but definitely does not go far enough. At the time of writing this blog the actuarial rate of interest needs to fall by a further 30% or so to bring it to the level of the current actual rate. The projected return has not been adjusted and remains 4%, regardless of your actual investments. This means that someone who is very close to retirement and is holding his investments in a savings account will receive a UPO showing a pension estimate around 25 – 35% lower than what he will actually get. That’s why I continue to argue in favour of real-time information about the investments and the level of pension pay-out. The technology exists!
BeFrank is an exponent of clear communication. That’s because what’s written needs to be understood as well as read. The mandatory, prescribed format of the UPO stands in the way of modern, innovative communication. Why not offer a ‘dynamic UPO’ or ‘real-time UPO’ so that employees can check whenever they wish how their pension is shaping up?
Providing real-time information goes further than the statutory obligation – but as a pensions administrator it shouldn’t be a matter of focussing solely on your obligation; you need to look at what you can give your clients that is relevant to them. That’s why we also developed the ‘My Pension’ app, which gives clients real-time information and shows risks by means of the pension planner. We’re also working constantly to improve our communication. We noticed, for example, that a growing number of our clients needed service in English – particularly international companies that have branches in the Netherlands. To meet this need, we now provide clients a service in English that goes beyond simply translating our employee portals. All legal documents, such as the UPO, are available in English. If the employee has opted for English he will also be able to speak to us in and receive correspondence in English. It would be terrific if the pensions register could also be made available in English – not because it’s compulsory but because it would satisfy a growing need.
Pensions are and will remain a complex issue. In my opinion, the measures and solutions currently being considered to future-proof the system need to be reviewed to make sure they can be explained and communicated easily. The UPO is just a part of that. The sector needs to take up the challenge and make sure that pension communication not only complies with statutory obligations but is also relevant and understandable to employees.
Chairman of BeFrank’s Executive Board