Pensions Technology Survey 2018
Pensions technology has the potential to change the way we work, how we make choices, and how we achieve our long-term objectives – whether as pension scheme members, trustees, sponsors, advisers or even regulators and policymakers. Just as technology is transforming other industries, pensions technology can turn pensions on its head, with better decision making, closer collaboration and common platforms, advanced analytics, and smarter use of resources for all parties in the pensions landscape.
While some employers have begun to exploit the potential of this technology, many others have yet to be convinced. Our research, based on separate surveys of employers and employees, charts a very mixed picture.
Some employers are convinced there is a broad range of gains to be realised, but others have not made that leap; some employers think they are already providing excellent technology-enabled support to their workforces, but employees are often less convinced; equally, employees say they desperately need more help with effective pension planning, and see technology as providing attractive options.
The biggest short-term benefit from investment in pensions tools could be to improve member communication, where many employees receive ad-hoc levels of contact.
While employers claim to be taking steps to encourage earlier member engagement with their pensions, many are not providing basic technology to facilitate this.
Employees lack confidence in their pension planning, but with only 34% prepared to pay a financial adviser for support, employers must step into the breach. However, only 39% of employers are aware of tools such as member outcome analysis that could help their employees plan more effectively for retirement.
Workers from younger generations are already more likely to view their pension savings online and now want much more sophisticated tools to manage their pensions; 62% would welcome new portals offering a single view of their wealth management, with pension savings linked to other elements of their personal finances.
Younger generations are not engaged with pension planning and worry about how to become more engaged. Pensions technology provides the solution – 48% of millennials would use an automated pensions advice app, rising to 60% of generation Z workers; 53% of millennials would use an online pensions portal linked to their bank account, rising to 62% of Generation Z workers. These figures are several times higher than for older generations including traditionalists and baby boomers.
While many tools will be member-facing, technology can also drive value for scheme sponsors and trustees, offering benefits such as greater cost-efficiency, access to de-risking analysis, enhanced cyber security and improved standards of governance.
Significant numbers of pension schemes will invest in new pensions technology over the next three years: for example, 61% expect to invest in tools that give members greater online access to their pensions.