The pensions industry is beginning to realise the power of play. But there’s plenty of room for more innovation, says Laura MacPhee

The capital’s commuters are not the most naturally tolerant of people, particularly when faced with a passenger who appears oblivious to the unwritten rules (no food or noise before 8am, and no eye contact at any time). Hence the collective sense of disapproval when the silence of the morning train carriage is broken by the sound of fictional guns being fired on an iPad game.

The perpetrator is a middle aged woman, so there is a sense she should know better. But she’s not the only one playing games. She’s just the only one who hasn’t discovered headphones.

“Every time I travel on the tube people are always playing games on their phones,” says Karen Heath, chief engagement officer at Anthony Hodges Consulting. “How great would it be if we could make some of those games that they’re playing also teach them some fundamental principles about pension saving?”

Gamification

Learning through play is not a new concept.  We have been discovering the world around us through games throughout our whole lives – nursery school teaching, for example, is predicated on educational activities.

When we are playing games we pick up the rules and aim for “positive” outcomes as defined by those rules. We are also very likely to play games repeatedly, thereby entrenching the principles conveyed.  

“People think they’re playing a game, and they think they’re having fun, but actually you can be teaching them some quite fundamental principles as well,” says Heath.

The pensions industry is beginning to realise the power of play. Some providers are already starting to build a technological playground to help people understand retirement planning. The fast-approaching new flexibilities mean it is more important than ever to communicate complex information to consumers in an accessible way.  

How great would it be if we could make some of those games that they’re playing also teach them some fundamental principles about pension saving?”

The key is to know your audience. “How does your audience learn?” asks Girish Menezes, a principal at Buck Consultants at Xerox. “Certain people have an auditory style, so they like to hear… some people are kinaesthetic so they actually have to play around with it with their hands. Some people are verbal so they want to talk about it”.

The beauty of online tools is that they have features which can appeal to people with a variety of learning styles. There will likely be sections that visual people can read, auditory cues, and games for people who take a “do and learn” approach.    

Online tools give users a safe environment in which to test how far they can push their savings and investment decisions, and what they need to do to attain the lifestyles they want.  “In a play environment people learn well because they’re prepared to take risks,” says Heath. “We see that with a lot of the DC based games in particular, where people can play with different investment scenarios – different risk levels, and understand the potential outcomes that they might get, without it being real”.

The key is to know your audience. “How does your audience learn?”

But if presenting pensions information in this way is so intuitive, why are these new tools only developing now? “To date, regulatory risk and the complexity of the software required to give advice in the UK has slowed progress,” says Gavin Norwood, a partner at Deloitte. “However, there are signs that the regulatory environment has changed and our own research has shown that technology has now evolved to the point where digital advice solutions (including generating the advice itself) can be built cost effectively”.

“We are starting to see much more innovation with products such as Retiready from Aegon and April will bring more innovation, especially in education and guidance,” Norwood adds.

Retireready is another online tool, which gives savers a score out of one hundred to indicate how ready for retirement they are. Users can type in information about their age, current and desired income, contributions and non-pensions savings. Retiready then calculates a forecast for them which predicts what their annual income will be on their current trajectory. If this falls short of their desired income it will also show what age they would need to retire at to reach their target at their current rate. There is then the option to create a more realistic plan to bring your goals closer.

We are starting to see much more innovation and April will bring more”

“We’ve had modelling tools for some years, designed to help people decide whether they’re paying enough in to get a decent pension,” says Paul Bucksey, head of DC at BlackRock. “I think the better tools on the market have tended to go down a more realistic holistic approach,” taking into account all aspects of a member’s retirement savings, whether they are in the form of DB or DC benefits, state pension, property income, or ISAs.  

Retiready is an example of a product aimed squarely at the members themselves. Tools like this may come in handy as savers try to negotiate the new pensions landscape where “choice” is king. But individuals may not be aware that these services are available, or may feel put off through lack of time or confidence.

That works particularly for younger people, who are less likely to want to get into the detail of retirement planning”

Members are likely to see their workplace schemes as a primary point of contact for their pensions queries. Guided Outcomes from Hymans Robertson gives schemes an online portal which they can use to guide their members towards an adequate retirement income. This will allow the member to find out if they are on track, and if not they can “do some additional ‘what if’ modelling or customise a solution that better meets their needs and requirements,” says Lee Hollingworth, a partner and head of DC consulting at Hymans Robertson.

“That works particularly for younger people, who are less likely to want to get into the detail of retirement planning. They’re more likely to say “What do I need to do? Tell me” and the model will do that,” he adds.  This allows the employer and trustees to direct the guidance which their members are receiving.

“There are key ages at which there’s a definite need for targeted messages and targeted tools to enable people to work out the most tax efficient way to take out a sum at age 55, rather than relying on whoever happens to call you up between your PPI calls and your double glazing,” says Trevor Rutter, a communication consultant at Like Minds.

Schemes can also think about using less conventional channels when personalising their communications”

Schemes can also think about using less conventional channels when personalising their communications.  BT has launched a service called BT Contact, which allows companies to create personalised videos designed to help them simplify and target their messages.

“One of the most important things about this method is that you’ll do it when you want to,” says Matthew Key, head of customer engagement at BT. “It would be really short – a minute or two maximum – therefore you’ve got interest. It’s very personalised to you, so rather than being a bland email or piece of post it will clearly identify you so it will be very relevant for you”.  

“People are using smartphones, and increasingly using video in all of its formats – we’re very used to video as a communications capability,” Key adds. As people become more and more comfortable with video and gaming technologies there are stronger arguments for pension schemes to use them to reach their members and help them understand the choices they need to make in order to avoid penury in retirement.