Technological advances mean more opportunities to connect with members. Why aren’t most pension schemes embracing this, asks Sara Benwell
Thirty-five per cent of working age adults have never checked their pension, according to new research from GlobalData.
That’s a fairly shocking statistic. It’s hard to imagine someone who doesn’t know what their property is worth, but the average DB pension is worth substantially more than most people’s homes.
And as DC savings increase, it seems likely that pensions will be the largest financial asset for most savers.
Part of the problem is inaccessibility. These days you can check your bank account balance or the value of your ISA at the click of a button. But pension schemes lag behind the retail finance world when it comes to technology.
This is disappointing, if unsurprising. The truth is that the nature of workplace pensions means most providers see HR departments as their audience, not consumers.
But it’s a huge missed opportunity.
Research from Aviva found that over half the population check their pensions savings once a year or less.
Most providers see HR departments as their audience, not consumers
The same study found that 33 per cent of people said they’d be more engaged with pensions saving if they could access balances more easily. The only answer that scored more highly was better education about how pensions saving worked.
That means that a third of your membership would be more engaged if you could just find a way to easily show them what they’ve saved.
What’s most frustrating about this is that the tools and technology exist and it doesn’t even have to be a particularly expensive undertaking.
In fact, partnering with retail institutions to show pensions data alongside other financial information - such as current accounts - could not only cut cost, but also mean that savers check their pension progress far more frequently than they would otherwise.
Danielle Cripps, Insurance Analyst for GlobalData said: “Open banking has great potential for pension saving. It has allowed banks to become one-stop shops for other products and services, which is something that pension providers should take advantage of. More pension providers should develop APIs which will allow customers to view their pension savings alongside their bank account.”
How Aviva is using Alexa to make pensions more accessible
One pension provider that has made strides towards ease of access is Aviva.
The insurer has developed a new ’Alexa skill’ that allows savers to find out the value of their Aviva pension without even leaving the sofa.
Customers registered on MyAviva can link the skill to their Alexa account and then ask the voice assistant to tell them the value of their pension pot.
All someone needs to do is say: “Alexa, ask Aviva for my pension value” and then Alexa will tell them.
Of course, for many savers - their Aviva pension may not represent all of their pension savings. But it’s still a fantastic example of how consumer technology can make pensions more engaging.
Pensions providers could also learn a great deal from the fintech arena.
Already there are apps that can round up your spending on purchases and invest the money in a stocks and shares ISA.
In world where low contributions threaten to derail the retirement savings project, this feels like a smart way to start nudging up people’s saving.
It won’t solve the problem of adequacy entirely, of course, but it certainly can’t hurt.
Cripps said: ”Fintechs are helping consumers save by focusing on short-term, day-to-day spending, for instance… [by] using artificial intelligence to determine how much consumers can afford to save per month and putting it away for them. There is an opportunity for pension providers to adopt similar thinking and form partnerships with such companies to grow pension pots.”
If a third of people say it will improve their engagement with pensions - it’s surely worth a shot
These are just two examples of how better technology could help improve pensions engagement and outcomes. And of course there are thousands more.
All that needs to happen now, is that schemes need to start adopting them.
The best place to start is by asking consultants. Many advisers have started building communications tools for schemes. And if something hasn’t been built already, if enough trustees ask for it - you can be sure it will be.
This requires a change in the way trustees deal with their advisers. Communications tools and strategies need to form a critical part of provider selection and reviews, just like track record, investment expertise and price do.
If scheme fiduciaries send a message that bringing pensions into the 21st century is a priority - solutions will rapidly be built and deployed.
It doesn’t take much, just some innovative thinking. And if a third of people say it will improve their engagement with pensions - it’s surely worth a shot.