Financial communication to retirement fund members : a survey among trustees and member stakeholders

Abstract

Only nine percent of South Africa citizens who are members of retirement funds will be financially independent once they reach retirement age. The other 91 percent will be dependent on other means to supplement their monthly income after retirement. Little is known about the financial communication sent to retirement fund members. This article thus aims to contribute to the knowledge base of financial communication in the context of retirement funds and to the managerial practice of financial communication in a retirement fund context.

A survey was conducted to determine how trustees and members of retirement funds perceive financial communication. The aim of the survey was to compare trustee and stakeholder members' perceptions of the various channels of financial communication, preferences with regard to the above financial communication channels and the importance of the message content of financial communication sent to members.

The results show that both trustees and members of retirement funds regard benefit statements as the most important channel of communication. There is a statistically significant difference between how trustees and members of retirement funds view the use of printed information and group presentations to communicate financial information. Both groups indicated a preference for information on a quarterly basis as opposed to annual reports.

With regard to the content of financial communication, both members and trustees indicated that the most important information is the current value and performance of their investments. With regard to preferred financial channels of communication, a statistically significant difference was found between how trustees and members view access to the pension fund's call centre. A statistically significant difference was also found between how trustees and members believe the pension fund should work.

This study attempts to make a contribution to financial communication within the context of the retirement fund industry in South Africa. It is necessary for fund trustees (management) to reconsider their traditional use of communication channels to inform fund members (stakeholders). It is anticipated that this study will increase awareness of financial communication in the retirement fund industry in South Africa where illiteracy is of national concern and where current financial communication is often drenched with financial jargon and technicalities merely to ensure compliance with legislation. Clear, understandable and unambiguous information content should be reflected in financial communication to trustees and member stakeholders.