Can technology build pension engagement?

Auto enrolment has helped millions of new savers prepare for retirement. But are they really engaged with their pension, or merely passive bystanders? What role does technology play in engaging savers across the whole pension journey? FNZ’s Nick Broker takes a look at the engagement landscape.

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Nick Broker

Head of Commercial UK & Europe

When did you last check your pension?

As we know, populations are living longer, which has had a huge impact on the way we save for retirement. In the UK, the consensus is that people aren’t saving enough to deliver an adequate retirement income, despite regulatory contribution minimums being recently stepped up.

So it’s natural that there’s an increased focus on the importance of pension saving at a government, societal and employer level – but has this focus trickled down to individuals?

Auto enrolment is working: Amber Rudd, the Secretary of State for Work and Pensions, said, “Automatic enrolment is an extraordinary success story. Thanks to this revolutionary reform, 10 million people can look forward to a more secure future and a better retirement.”

She’s right. That 10 million people are now saving into a pension is of course an extraordinary number, representing a significant chunk of the population who now use this innovative approach, designed and delivered by business, employees, government and the financial services industry to secure their future.

And fintech investment platforms in the workplace have been a game-changer too, delivering simple online portals that allow members to interact with and administer their contributions and pension investments online.

But is it enough?

Saving vs engagement

Are we doing enough to maintain people’s interest in their pension beyond initial sign-up and an annual statement? And can our digital culture be used to increase individual investor engagement?

When FNZ launched our first workplace investment platform in 2011, the level of saver engagement was less than 4%. That is, one in twenty-five people looked at their pension over the course of the year. Our initial target was to double that.

In 2012, 12% logged into one of our platforms at least once. By 2018, that had risen to 30% -- nearly one in three. And almost 10% logged in more than three times (which is our benchmark for ‘engagement’).

This is clearly a huge rise, mirroring trends we see elsewhere, yet still only one in ten people are classed as ‘engaged’ when it comes to their pension.

In 2012, 12% logged into one of our platforms at least once. By 2018, that had risen to 30% -- nearly one in three.

FNZ research, 2019

Outcome based investing - creating deep relationships

When we can order a taxi on our phone or buy flights to anywhere immediately, the world is convenient. Any hint of friction in buying processes means losing the chance to engage. But digitalisation can’t raise engagement by itself. Pensions are still seen as dry and dull – and although platforms make things hassle-free, that’s all they do. They don’t excite us in the same way as beautiful images of the Caribbean when we’re looking at flights, for example.

True engagement comes when we can show that actions produce an outcome. The sweet spot is an active interest, achieving a tangible outcome. That means we need to make pensions and investments relatable and ‘real life’. We need to move people swiftly through the on-boarding processes to tackle the important questions: how much needs to be paid in to achieve a target benefit, and at the lower end of the scale, how much pension will I get for a certain level of contributions?

Platforms must continue to ensure that they increasingly fit into the modern day culture of convenience. They need to be delivered across multiple devices and be available anywhere, anytime, 24/7.

As with all industries, increased levels of personalisation will help to deepen both interest and engagement with savings and investment. Personalised communications, tailored to individuals’ circumstances, will help to create meaningful relationships that further drive engagement. Uber notifies us that my ride is outside, shouldn’t I be told I’ve just benefited my retirement with another contribution or reached a personal milestone?

The stakes are high. We need to look thematically at both digital and non-digital ways of changing the way people manage their wealth, which will lead to better investor outcomes and achievement of financial goals.

The stakes are high. We need to look thematically at both digital and non-digital ways of changing the way people manage their wealth, which will lead to better investor outcomes and achievement of financial goals.

Nick Broker, Head of Commercial UK & Europe, FNZ

So maybe we should ask a different question Instead of asking ‘when was the last time you checked your pension?’. We should ask ‘when was the last time you thought about your future?’. And in financial services, our standard follow-up question should be ‘now, what can we do to help you improve that future?’.

I’d love to hear your views.