The new pension system requires a different approach to participant communication. The biggest reason? The introduction of personal pension pots. APG has therefore carefully developed a new communication strategy, explain Fleur ten Brummeler and Gineke van Loon.
The transition to the new pension system brings significant changes for participants. Previously, there were pension entitlements, but in the new system, each participant will have their own pension pot. The amount of pension benefits will depend on investment returns, meaning pensions will fluctuate more in line with the economy. Some pensions may grow faster than others. A buffer, also known as the solidarity reserve, helps spread risks across multiple generations. By contributing to this reserve in good times, financial shocks can be absorbed in more challenging periods, reducing the likelihood of sharp declines in expected pensions.
The impact of these changes also depends on a participant's age. The new rules ensure that fluctuations become less pronounced as a participant gets older. Younger employees have more time to recover from investment setbacks, allowing a riskier investment strategy with the potential for higher returns.
A new reality
“This new reality also impacts participant communication”, says Ten Brummeler. That is why APG began preparing for a new way of informing participants as early as July 2023. “The communication strategy has been structured into three phases. It starts with informing participants that changes are coming, explaining the new pension system, the transition timeline, and how their pension will be affected. The next phase focuses on what these changes mean for participants personally, outlining the consequences and directing them to sources for more information. Finally, participants are encouraged to actively engage with the available information and check their updated pension figures more than once. This includes accessing the final transition overview.”
Ensuring effective communication throughout this process is a complex operation, notes Van Loon. “The transition communication began at a time when many details about the new pension system were still unclear. Over time, it became clearer how and what needed to be communicated to best align with the needs of pension funds, their participants, and the recommendations of regulators.”
A strict timeline
The complexity of the transition, along with legal requirements, necessitated a strict schedule. Funds must provide participants with an annual Uniform Pension Overview (UPO) on time. Funds transitioning to the new system - such as PPF APG and PWRI in 2025 - must also provide a transition overview to participants. APG sends this transition overview together with the UPO in a single mailing. This approach helps participants better understand the information and its context while eliminating the need to gather multiple documents, making the process more convenient. The transition overviews for PPF APG and PWRI participants were sent at the end of last year.
For the pension funds APG works for, a layered communication approach has been used. In the initial letter, participants receive an overview of their expected pension and are directed to the participant pension portal for more details. For those who prefer physical documents, an attachment is included. The projections provide insight into what participants or retirees can expect, assuming that both their personal situation and that of the fund remain unchanged. Once the transition process is fully completed, participants, retirees, and inactive members will receive a final calculation. “This is the phase we are in now for PWRI and PPF APG. Most of the participants received their final calculation”, says Van Loon. "Is it exciting? Absolutely. After all, for participants, the most important thing is knowing what their expected retirement income will be. That provides the clearest picture of their financial future.”