It’s not just pensions as a product that is changing, it's the delivery of the product that would no longer be recognised by our parents or grandparents, writes Clare Gascoigne
“More and more people are familiar with portals – finding information on a laptop or smartphone is the norm,” says Matt West, chief sales and marketing officer at Benefex, a reward and benefits solutions provider. “But in HR, we’re still pushing too many bits of paper around. We haven’t even scratched the surface.”
Platforms and portals are an increasingly important part of Human Resources and of corporate pensions strategies; more than a third (36 per cent) of employers plan to offer staff access to a wealth management platform, according to research from Towers Watson. There is nothing new in the idea of an online, company-branded, one-stop shop to deliver information, but technology is making them positively entertaining.
It’s about getting people interested and engaged,” says Martin Palmer, head of marketing benefits for Friends Life, a provider of financial products. “A platform allows you to put in the information that’s important to you at that moment.”
Interactive graphics, adjustable tools to show how much your pension would increase if you put in an extra £50 a month, projections that tell you instantly what your money will be worth in 25 years’ time – such ways of grabbing attention are a far cry from the dry paper statement landing in your post box once a year.
“Online modelling tools demonstrate the effect of increasing contributions,” says Karen Partridge, chief business development officer at Anthony Hodges Consulting. “Members often don’t appreciate the impact of tax relief and demonstrating this can make something that appears unaffordable suddenly seem affordable.”
When the result can be demonstrated graphically, the message begins to sink in
It can also bring home reality, managing expectations so that individuals are not lulled into believing they are saving enough, when the truth is very different. But while it’s easy to see the advantage for the employee, what’s in it for the company? After all, such platforms don’t necessarily come cheap.
“There’s a direct correlation between an employee’s engagement with his or her financial situation and engagement with the company,” says Steve Watson, head of pensions and benefits at consultants Alexander Forbes. “Engaged employees are more productive and that means more profit.”
It’s also about recruitment and retention, he believes. As defined benefit schemes wither and die, employers have to find another way to generate company loyalty. “Platforms and portals bring in the personal,” says Mr Watson.
Nor is it just about the corporate benefits. Today’s platforms can be built to encompass the whole of the employee’s financial situation – adding in pensions from previous employers and savings made outside the company, as well as giving people the ability to switch between gym membership, for example, and extra pension contributions as their needs and wants change through their lives.
“Pensions do not provide instant gratification,” says Mr Watson. “As an industry, we throw a lot of information at people which doesn’t work. This is about seeing your whole financial situation.”
It’s also about financial education – a key part of any benefits strategy. After all, it’s only by understanding that staff come to appreciate the value of an employer’s pensions contribution and what it means to their financial wellbeing.
“It’s really hard to get those messages across,” says Emma Douglas, head of Mercer Workplace Savings. “Many employers offer extra matching contributions into a pension or savings scheme, but there is notoriously bad take up of such ‘free’ money. Showing what lifestyle you can expect in old age without increasing your contributions can be depressing, but it’s very engaging.”
When the result can be demonstrated graphically, the message begins to sink in.
So will platforms and portals (the terminology is largely interchangeable) increase pension savings across the UK? It’s too early to tell whether that aim will be achieved; but for companies wanting to recruit and retain the best employees, a well-designed company platform can provide that critical edge.