For someone who champions workplace financial wellbeing, these are very exciting times. We are on the verge of a revolution in the UK’s attitude to long-term savings. Over the last decade, investment in fintech has exploded and is transforming the way we interact – and expect to interact – with financial products and services. This change is finally reaching the workplace savings and pensions market – we’re catching up with the rest of the world!
The rise of ‘robo-advice’, online risk-profiling tools and simple investment platforms with low minimum contribution levels, is making savings, investments and useful financial guidance accessible to a greater number of people than ever before. And not before time. The fact that you could take out a payday loan (at extortionate rates of interest) in just a few clicks of a mouse, but starting an ISA or pension would likely be a long-winded process, with endless paperwork and potential advisory costs, is more than a little concerning. We can only move from a ‘borrowing’ to a ‘saving’ culture if we first give people the tools and information they need to properly manage their money. Likewise, we can only encourage people to engage with their workplace pensions and benefits if we make it easy for them to do so.
Disrupting for good
The arrival of technology-driven start-ups in UK financial services has provided much needed disruption, and forced the industry giants to also examine what they do and start putting user experience first.
Aviva are investing heavily in technology with the creation of their digital garage and Aviva Ventures innovation fund. When designing their auto-enrolment proposition, Aegon focused on creating an end-to-end process that is almost paperless. In 2016, Scottish Widows launched their development lab, with significant funding to transform their workplace pensions proposition; focusing on improving processes and user experience, and cultivating a new, agile working environment. Smart Pensions have adopted Amazon’s Alexa technology to enable members to access information on their pension savings, and even increase contributions, with simple voice commands.
Industry-wide and government-led initiatives such as the pensions dashboard and introduction of open banking will help further drive transparency and accessibility of the previously opaque and ‘mystical’ (not to mention, boring!) world of pensions and investments.
Imagine the difference all this will make. No more lost pension pots. No more having to dial several numbers, deal with laborious push-button telephone menus and read through eight pages of BLAH just to find out our current fund value. Instead, we will simply say ‘Siri, what’s my current pension fund value?’, ‘Alexa, am I on track to meet my target income in retirement?’. Hoorah!
The move to digital
Of course, since the introduction of stakeholder pensions at the start of the century, providers and employers have been gradually embracing digital solutions. This started with simple online payment systems for employers and some basic member-access websites. A good start – but still a very long way to go. Member use of the online tools available was typically minimal, and the majority of pensions information was still provided in gigantic, indecipherable paper packs. Little wonder then that people weren’t flocking to their scheme websites in droves. In many cases, in order to even know about the member website, people would first have to wade through the pensions bible that had landed on their doormat.
Alongside this, we saw the dramatic growth of flex and online benefit portals. Employers and providers started to transform the way they provide information to employees and members, using consumer-marketing tactics rather than dry, formal ‘corporate’ communications. But, still, getting people to engage with their workplace pension and savings remains a challenge – despite pensions typically being the most expensive, and most important, employee benefit.
If employers want the best possible chance of achieving high-levels of engagement with their workplace savings, then we know it is vital for employees to have access to a user-friendly platform and clear, simple communications. The younger generations of today’s workforce, Millenials and Gen Zs, are digital natives and expect to interact with everything online. Their workplace benefits are no exception. The fintech revolution means that workplace savings and pensions can finally meet the demands and expectations of today’s employees.
A complete picture with timely nudges
Advancing technology also makes it easier for people to see a complete picture of their financial health, with their salary and pension likely to be two of the biggest components. In recent years, we have also seen the dramatic shift in focus to ‘wellbeing’ rather than ‘benefits’. This means we are no longer looking at workplace pensions in isolation, but as part of broader financial wellbeing programmes. Employers can now offer multiple savings products alongside their workplace pension, all administered on a single platform, with educational videos and intuitive calculators and modellers.
REBA research in 2017 showed that 19% of employer respondents currently offered a financial wellbeing platform. A whopping 61% either had one in development or were planning to implement one in the next three years. The best of these platforms enable targeted, personalised communications and timely ‘nudges’ to help people take the right action at the right time.
Governance in the real-time era
Crucially, this new-world technology will make it easier than ever to ensure you’re offering a scheme that enables good member outcomes. Pension and benefit platforms that enable you to see real-time management information (MI) so you can act on any issues quickly, rather than discovering them after the fact. Charges, service levels and performance are all becoming more and more transparent, and increasing digitisation helps to drive down costs. Meaningful benchmarking can be done at the touch of a button. Delivering relevant, personalised communications to large numbers of people becomes a day-to-day reality.
We’re not quite there yet, but the pace of change is increasing dramatically and what we have seen so far is just the start. As with everything, the level and speed at which different providers and employers are embracing the power of technology varies greatly. However, the innovation in our industry is delivering some wonderful benefits. I look forward to the day when these revolutionary changes we are seeing, in terms of transparency, access, communications and financial education, just become ‘the norm’ for workplace savings and pensions.
This article was first published with REBA on 10 July 2018