Retirement has changed significantly in recent years – people are living longer and enjoying varied lifestyles that defy the traditional notions of the ‘old-age pensioner'. But older adults still face increased risk of certain mental and physical vulnerabilities, adding another layer of complexity to retirement planning.
A recent study from Just Group found that around a third of Defined Benefits pension scheme members identified themselves as vulnerable.
Only 10% of the respondents who identified as vulnerable felt very confident in planning for retirement - highlighting how important it is that these members receive adequate support.
Identifying vulnerable individuals is a complex task that involves considering a wide array of health and welfare factors and their associated indicators. So how can pension trustees meet these challenges and be confident they will continue to be met post-buyout?
The challenges of supporting vulnerable members
Supporting vulnerable pension scheme members is not a straightforward task.
Vulnerability may stem from one or a combination of mental and physical health conditions, life events, or simply a lack of understanding of financial terms and pension entitlements. And in some cases, people may not even realise they are vulnerable.
It is therefore essential that those working with pension scheme members have adequate training, so that they can better identify red flags and act accordingly. Just Group have dedicated Vulnerable Customer champions, have put extensive training in place for their customer services team and have worked with Dementia Friends all of which is allowing them to tailor their service to better support such members.
Communication is key
Laura Pertile, Director of DB Member & Operational Services at Just Group, points out that the responsibility of identifying vulnerabilities often falls to those on the ‘front line', handling direct interactions with customers and scheme members.
"We need to be asking the right questions without making assumptions and, if there's something we can help with, offering it in a clear and comfortable way," she says.
There is no one-size-fits-all solution, Pertile notes, but communication strategies must be as inclusive as possible. "Helping members to access and understand the information and what they've got is really important," she stresses.
Taking the example of DB pensions versus DC pensions, Pertile notes that there can be an assumption that people know the difference between the two. "Some people do," she says, "but our research suggests that it's a real minority – and it's our responsibility to be much clearer, much sooner, so that people understand that this one over here has guarantees which generates security. There is a difference in what a DB pension at retirement will leave them with in later life – and that's our responsibility."
The role of technology
Technology is also helping to identify and manage vulnerabilities more effectively.
"There's software we are exploring that we can use early in the relationship with the customer, where they can self-identify as having a vulnerability," says Pertile. This technology, she adds, will help to ensure that vulnerabilities are logged and addressed from the outset, providing a proactive approach to member care.
However, Pertile also points out that technology can be something of a double-edged sword, as difficulty using the latest software and devices can in itself be a vulnerability.
"We can't disregard the traditional voice or letter process, because that makes a huge proportion of our population very, very comfortable. It would be wrong to assume that everyone is comfortable with the likes of two-factor authentications to log into a website – and we shouldn't push them to do so," she says.
"Technology should handle repetitive, back-office functions. But when it comes to member experience, vulnerability, and supporting members, it's the people skills and human interaction that are the real value-add."
Transition to buyout
The transition to buyout can be an anxious time for pensioners, particularly those with vulnerabilities. Trustees play a key role in managing this shift, ensuring that members continue to receive the support they need.
"As part of the transition process, we ask trustees if they have any members who have a vulnerability that we need to be aware of to make adjustments for at the point of buyout," says Pertile. "This helps ensure that members with specific needs are accommodated during the transition."
By communicating members' individual requirements, the transition can be made smoother, ensuring vulnerable members are not left behind.
Looking to the future
Looking ahead, the challenges of supporting vulnerable pensioners will only increase as the population continues to age.
Vulnerabilities are not static and can evolve, particularly in older members facing cognitive decline or significant life changes, such as bereavement. Effective communication and the ability to recognise these changes early are key to providing appropriate support.
"Vulnerabilities are something everybody has to be aware of. At Just Group, our purpose is to help people achieve a better later life placing members at front and centre of everything we do, so we are constantly listening, learning and adapting our service to offer them the best possible support," says Pertile.
You can explore more of the options and products available to DB schemes by visiting Just Defined Benefits
