At WTW, we believe a key part of Pensions Dashboards being effective and successful is ensuring that they form part of an engagement and education framework. For pension scheme trustees and sponsoring employers, there are benefits to a powerful Dashboard framework and risks associated with a bad one. Here we share our views on how to get this right. We must move into this new era of pensions transparency acknowledging the challenges presented through the level of pensions understanding and financial literacy in the UK and provide the support individuals need.
Research by the Association of British Insurers (ABI) shows that 4 in 5 of the UK public think pensions are an important part of people’s finances, but half struggle to find their pensions information. Pensions Dashboards clearly have the potential to deliver individual education, engagement, and accessibility to address this issue. Furthermore, Pensions Dashboards also provide schemes with the opportunity to connect to a much wider group of members than ever before.
Creating a thought-through and joined-up experience for pension scheme members will be key to maximising the wider benefits such as driving digital self-service or supporting de-risking aims.
The ABI research notes that “there is a strong expectation for Dashboards to be complete and up to date” and “whilst consumers do prioritise completeness in theory, in practice they don’t want this to come at the expense of mistakes.” So, what does this mean for members?
Partial matches. If the data a member inputs doesn’t match with what’s held by the provider, it’ll generate frustration (for members and administrators). Administration teams are helping clients to consider ways to minimise this, but it’s still a very real risk for a large group of savers.
Inconsistent pension values. Some providers are looking to update the data on Pensions Dashboards annually, resulting in the potential for inconsistency in the values shown on scheme communications (such as retirement quotations or member portals). This could be further amplified in periods of financial turbulence.
But what will the member do if they are confused or the information is unclear? Pensions Dashboards will provide relevant scheme specific website links for a member to discover more about their confirmed and potential schemes. For those who connect through, schemes will need to be prepared to triage members, answer questions and provide support.
Our consumer research shows three consistent themes that define member expectations:
We anticipate that, once connected, scheme members will be hungry to explore their pension values, projections, and retirement options. They’ll want to understand how this information can help with overall financial planning. The bar is high.
Every sponsor and trustee has the ability to empower individuals to make supported and informed decisions about their retirement savings. Taking an all-encompassing approach to helping members can lead to a positive Pensions Dashboards experience, as well as enhancing the value members receive from their savings. Trustees and sponsors are unlikely to be able to influence the Dashboard framework members use, but can influence the information shared with the Dashboard and the supporting information from their pension scheme.
Enhancing the ‘pull’. Every scheme and membership is unique, so it will be important for sponsors to consider which engagement solutions are appropriate for their employees, for example education on retirement savings, support for retirement decision making and financial wellbeing education.
Deferred members are another large population that will benefit from Dashboards. When deciding on the framework that will be put in place, trustees should consider this in the context of the scheme’s wider objectives. Read our Pensions Briefing article: Accelerating your pension scheme strategy for more information.
And the ‘push’. Nudges have and will continue to play a very big part in driving member engagement. We know that making information accessible and easy, through regular updates and reminders, drives positive action.
With the criticality of getting data ready for the connection date, it may seem too early to think about the member experience.
But any change requires preparation; your members need to be prepared for this era of greater transparency and information. The following building blocks (figure 1, below) give you a framework to get started.
|Before Dashboards are live
You have rich member insights at your fingertips: both demographics and behaviours. How can these be leveraged?
How can you help members have a better experience from the moment they log in? Is your priority members with multiple periods of service? Do you have a lot of deferred members past normal pension age that would benefit from a wake up call ahead of Pensions Dashboards being available?
What questions will your members have after they have connected to a Pensions Dashboard? Will they be able to easily find what they need online (whatever their circumstances)? Are there any gaps in your retirement support and/or modelling capability that it would be beneficial to address now?
Members may be provoked to consider consolidating their pensions. Will they know how to do it and is there an opportunity to think about that today?
What about the unreachable, the unengaged, the vulnerable? How will you consider different member needs when defining your Dashboards experience and designing the members’ journeys? How will you protect members from the risk of scams?
Frequent communication builds trust, and knowledge is power. There’s a lot we can tell members. How can we help them understand what Pensions Dashboards will and will not do, as well as prepare them for how they work?
How familiar are members with their retirement savings? Should you be driving more members online sooner to familiarise themselves with what the scheme offers today?
There’s a lot to think about. A well thought-through member journey can make a significant difference to the retirement an individual can achieve. We’d be delighted to share our approach and latest thinking. Contact your WTW consultant or one of the Pensions Dashboards team below.
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