Fintech is going to play a “hugely positive role” when it comes to increasing people’s engagement with their retirement savings, the Pensions and Lifetime Savings Association policy lead: engagement, EU and regulation James Walsh has said.
Speaking at the Pensions Age Northern Conference, Thursday 14 June, Walsh said there is some “fantastic ideas” at the moment about how to improve pensions communication, such as a standardised pensions statement, pensions dashboard, and savings targets. He stressed that everyone in the pensions industry needs to “get behind” the ideas to help improve the way the industry engages with people about their pensions.
In particular, he said the pensions dashboard and retirement income targets could not have happened five years ago because the technology wasn’t there. He said fintech is going to play a “hugely positive role” in increasing engagement with pensions.
Proposed last October by the PLSA, national retirement income targets, known as Rits, are designed to answer the fundamental question of how much people need to save for retirement. “We put this idea out for consultation last autumn and we got some pretty positive responses of support. A lot of people said it was a great idea but to keep it simple, for example, don’t have lots of different targets for different areas of the country,” he noted.
He used the Australian targets of a comfortable retirement, modest retirement and surviving of the country’s age (state) pension, as an example. He said the “simple genius” of them is that for each of these levels of income they show the kinds of goods and services you would be able to afford.
On annual statements, Walsh said there is in initiative led by Ruston Smith, the former chair of the PLSA, pushing for the standardisation of annual statements. Walsh stressed that we will never get to a stage where everyone adopts exactly the same statement, and there will be room for providers and schemes to put their own stamp on it.
“But wouldn’t it be great if people could follow the same kind of order of statement, use the same language, use the same projections. That’s something I would encourage you all to look out for and consider using in your own schemes.”
Moving onto the pension dashboard, Walsh said that in the long-run paper statements are going to be “old hat”, highlighting that many people now look at their bank statements and utility bills online. Walsh said the PLSA supports one central dashboard but there could be room for providers to provide their own dashboards, and it is a “question the government is grappling with at the moment”.
“There has been an industry-wide push to do this, there has been a technical project that has proved that the technology is there to support it…the great thing is the government is very supportive, the Department for Work and Pensions (DWP) is pushing it forward, they’re about to launch a feasibility study in the next few days.”
Finally he stressed that the three ideas: simpler annual statements, pensions dashboard and Rits are “complimentary ideas”.
“I like to think these three things all complement each other quite nicely. If we are going to get people more engaged with pensions, we’ve got to give them more information in a way that they can understand – so that is simpler statements. If they’re going to understand if they’re saving enough for retirement, or if they need to save more, then that’s where the targets will help them understand, and in order for the targets to work, you’ve got to pull together information about the entirety of people’s pension entitlement, and that is the dashboard.”
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