Today the Pensions Bill will sit within the Queen’s speech and within the Pensions Bill will be proposed legislation to make it mandatory for pension schemes of all DC persuasions , to provide digital data to a pension dashboard. The timeframes are long- five years – these are not ambitious.
This week saw two radically different approaches to how our financial data is managed. The DWP issued a long consultation on a simpler pension statement which included sections on the colour of envelopes in which paper statements were delivered. The FCA produced , the following day, a Call for Input asking whether pensions data (inter alia) should be as “open” as our banking data.
It is clear that if we are to have digital pensions dashboards they will have to work in a system where data fills the dashboard templates in real time. For the majority of working-age adults, the production of digital banking statements are expected to be real time. Even if we are still getting information through a cash-point, we expect to see balances in real time.
The standards set by and for the pensions industry are still in the paper age?
Managing the transition
In all walks of life, we are getting used to not getting paper statements. Few people still get paper payslips, hardly anyone gets a paper bill from their broadband or mobile supplier. The transition to text or e-mail based statements has been brutal. While you can opt back in to paper, it is expected that you won’t and very few do.
We have successfully managed a transition away from paper comms in so much that I now feel embarrassed when I get statements from First Direct through my letterbox.
I am embarrassed and I’d happily move to getting all this information on the web , with texts as prompts for me to look at it.
I am also embarrassed because I know that I am part of a massive mailing operation which must have a considerable carbon footprint which I am contributing to. Digital is a greener way for me to get information.
It is very hard to argue for paper comms in banking and equally hard to justify paper comms in pensions.
The end of the paper statement
If I have a pension dashboard, I have links to those who supply the data and can use those links to request further information. The FCA’s Open Finance paper makes it quite clear that open finance extends to open pensions and that I should be able to access not just by pot value but my contribution history at the click of a key.
I should also be able to find out how much I paid for pension management and what value I got for the money that sits in my pot.
Gearing up for the time when I can use Open Pensions to manage my retirement plan, I hope shortly not only to see all my pensions in one place, but to have all the information that I need to manage my retirement plan, available to me from my dashboard.
I want so much more than pieces of paper, I want control of my financial affairs in later life and I want my management information on a single screen. I may be too frail to see it all on a phone, I may need a tablet or a larger screen, but I want my information clear, vivid and in real time.
The Paper statement is not the way forward, it is an anchor to the past. Even Q-codes are admissions of failure, when live links are the standard.
We must stop worrying about the colour of envelopes and aspire to digital journeys that take people where they want to go in as few clicks as possible.
How do we get there?
There is a simple way to find out how people want their data digitally. I can think of at least eight messaging systems I use every day. Whats app, Facebook messenger, Linked In messages, Gmail, hotmail, twitter, SMS and Slack. All of these are capable of delivering a link to a pensions statement.
The simplest way of explaining to people that they can get their statements the way they want them is to build out to these messaging systems so that people can choose for themselves.
And one the great thing about messaging systems is that they do not depend on where you live.
Another great thing about digital comms is that you can generally monitor delivery and open rates.
(Dis) Engaging with customers
Savers are our customers, if the phrase “pension industry” means anything, it should refer to our industrious service to our customers. We should not be happy with the way our customers respond to the service we are currently giving them
The most materially independent piece of research that has been done on Annual Statements was by IgnitionHouse, led by Janette Weir, with in depth interviews with over 70 DC members and a nationally represented online survey with 1,000 members between the ages of 22 and 65.
This independent research revealed that only 14% of members read and understand their pension statements well. The FCA’s 2017 Financial Lives Survey also found that 23% read and understood their statements well.
So over three quarters of the people we are serving are simply not connecting with one of their largest financial assets.
So long as we keep sending our customers the wrong messages in the wrong format through letterboxes not digital hardware, we confirm to them that pensions are difficult.
If we want to make pensions easy, we have to start with the points of engagement we have and that means learning to talk with our customers as digitally competent adults.
I accept that a proportion of people are digitally excluded (though that proportion is getting smaller all the time).
For those who want an opt-out , we should offer paper. But we should not encourage opt-outs (of any form). If opt out rates for digital communications are as high as for auto-enrolment I would be surprised.
As we move towards an era where financial data of all kinds will be open, those opting out will either be conscientious objectors or those for whom adoption of digital technology is too challenging. Both classes of customer have special needs which should be respected.
But auto-enrolment is not driven by those opt-out but those who stay in and open finance should be the same.
We currently risk excluding large parts of the customer base for workplace pensions by failing to give people pension statements. I do not mean by this those modern providers who see self-service as business as usual, but the vast hinterland of workplace pensions that are operated by administrators with systems geared to the production of paper.
We must move fast as away from considering digital exclusion as a problem for the many – to an issue the for the few. There are still far too many excluded from proper pension engagement , because we are not treating our customers, as digitally savvy.
We are no longer in the paper age
Quite, but I guess we sometimes forget that there are many tens (hundreds?) of thousands of small employers with 5 or less employees, and many will use paper still, although their advisers (accountants, payroll agencies, etc) will no doubt be catching up and nudging them towards digital solutions.
Merry Christmas to all busy pensions professionals!
The problem is that vast numbers of people aren’t digitally competent adults. This problem might slightly diminish with time, but shows no signs of going away at all. Moreover, auto-enrolment has brought the complexities of DC pensions to many of the people who don’t do digital. Making communications digital by default simply means that these people don’t get anything at all, whether it be payslips or pension statements.
We obviously need to move to digital for all those who can benefit from it, but we may need to actively move back to paper for those who are not digitally competent.
How many apps do you use?
What’s wrong with a pensions one?
I agree Henry with most of what you say but there is always the forgotten and by that I mean those who are or become infirm who never had or lose the ability to use the web… we must not forget them.
there are no employers big or small who can use paper (apart from the Plymouth Brethren who have a religious exemption), that ended in 2013 when RTI came along – sadly the pensions’ industry was allowed not to embed a standard API into payroll to communicate pensions’ data to providers and the result is a chaotic mess of individual, not fit for purpose, interfaces that make pensions’ data more likely to be wrong. let’s hope the dashboard makes a standard API a legislative requirement as it is for payroll data