Play your way to a wealthier retirement

Virtual reality games are being adapted to encourage more people to engage with the real-life need to save for retirement, as Dan Barnes reports


Pension communications consultancy AHC is exploring the use of popular virtual reality games and techno gadgets to promote saving for retirement.

Sam Charles, AHC’s head of web consulting and development, believes technology can help break down barriers to pensions investment, such as the lack of immediate reward, particularly among young people.

The consultancy has developed a demonstration kit for use with the Oculus Rift virtual reality headset.

“We have created a demo with virtual scenes for your virtual self where you control how much you save now, and that has a material impact on the possessions and surroundings of your virtual future self,” says Mr Charles.

A number of AHC clients, such as insurer LV, are using visual rewards for engaging with their pensions. LV’s website – LVpensionvillage.co.uk – is optimised for mobile and provides a virtual high street with tools and toys, such as modelling retirement forecasts.

While such technology may still be far from commonplace, it could improve engagement considerably, says Justine Tate, managing director of the Pension Quality Mark, developed by the National Association of Pension Funds and awarded to schemes that reach high standards on contributions, governance and communication.

Ongoing communications, including member engagement, have to be direct – face-to-face or by telephone, tailored individual information or generic information conveyed via newsletter website or intranet site. However, some pension schemes are breaking away from traditional forms of communication to embrace social media as well as virtual reality.

CANDY CRUSH

“I think the gaming idea is brilliant,” says Ms Tate. “If you can get people to play Candy Crush in the pensions environment, then it would be more exciting. It would probably reach the younger demographic and getting younger people to think about saving early enough is one of the challenges.”

Some pension schemes are breaking away from traditional forms of communication to embrace social media as well as virtual reality

Jason Hayes, of pensions administrator Equiniti, adds: “There is an expectation from members that they should be able to access their pension benefits through their mobile devices. They can shop and bank from their mobile phones, so they should be able to access their pension scheme.”

In addition to providing online services for schemes, Equiniti has launched an app that encourages users to interact by pushing messages to its users regarding relevant and important events, such as monthly investment cycles or pay slips.

Importantly, using online or mobile communications provides the scheme with feedback on the level of success its communication is having, so any campaign can be tailored.

DATA ANALYSIS

“Successful engagement isn’t just about the number of members that have registered to use self-service, it’s about how often they return,” says Mr Hayes. “Analysing the data we capture helps us ensure members get the best experience.”

But can encouraging a mobile or virtual reality approach to interaction with pensions really save a generation from experiencing retirement in poverty?

The latest figures from the Department for Work and Pensions forecast that 11.9 million people in the UK will have an income below target at retirement based on inadequate investment, with 53 per cent of them making less than 80 per cent of target income.

As workplace pensions are switched from defined benefit (DB) schemes, which offer a fixed return to members, to defined contribution (DC) schemes, with returns on input and management of investment, the potential for lower returns is increasing.

Peter Nicholas, chief executive of AHC, says: “When building your pension you can make a big difference, but only if you have enough time.”

With the announcement in the 2014 Budget that scheme members will be able to make withdrawals from funds, the need to understand the impact of changes in a pension’s value has never been greater.

In the summer of 2013, the London School of Economics and Thomsons Online Benefits reported that pension scheme members were more considered in their attitude to pensions if employers engaged with them about the value of the scheme and the decisions they needed to make.

The report, entitled The impact of a total reward approach on workplace pension engagement, found that almost 10 per cent of scheme members, who were not engaged by a “total benefit” approach, were not even aware they were part of a scheme, against 0.4 per cent from the engaged group.

It also found that, where employers engaged with pension scheme members using a holistic approach to all the benefits they received from the firm, scheme members became more engaged with their pension.

Mark Pemberthy, executive director at JLT Employee Benefits, concludes: “If a member does not get involved with the scheme, they carry a huge degree of risk, potentially ending up with too little money. That means they have to work longer or retire poorer, or both.”