Estimated reading time: 4 minutes
Paperless pensions is an appealingly simple idea covering a multitude of organisational, environmental, technological and security challenges. Drilling right down, we are essentially talking about a sustainability issue for the whole industry – how do we receive, integrate, manage, transmit, secure and future-proof information? Do we tinker at the edges or do we have an ambitious joined-up vision?
Where do we want to be in five or ten years? How are we going to get there? These are big, transformative questions that go far beyond just cutting down on ‘snail mail’.
"We work, bank, shop and socialise online, so it naturally follows that our pension schemes should be online with us."
The member angle – inbox or letterbox?
Discussions around paperless pensions tends to focus on the user-end, looking at member online engagement strategies and technologies designed to maximise and monitor uptake and usage. This makes sense, the inbox has already replaced the letterbox in almost every aspect of our day-to-day interactions with the wider world. We work, bank, shop and socialise online, so it naturally follows that our pension schemes should be online with us.
Resistance – the ‘little old lady factor’
There is a significant and unsurprising member appetite for online delivery. Demand across the industry is also from trustees and scheme sponsors eager for online solutions and information sharing. It may be surprising then that specific resistance to member online services in pension administration has often come from trustees themselves. Part paternalistic and part-protective instincts towards members, fears around cyber risk and a worry that the all-important ‘personal touch’ will somehow be eroded have all traditionally played a role in the relatively slow adoption of online services.
This is completely understandable, pension terminology is loaded with assumptions and even the term ‘pensioner’ suggests a certain vulnerability, a quaint bafflement in the face of ‘modern technology’. In reality though, this is a hugely oversimplified and condescending version of a scheme member. Outside the state sector, the pensions industry is almost unique in that we don’t have a ‘target demographic’. The world is our customer. The lifetime nature of pensions and the associated inter-generational dependencies, mean that scheme members can be any age, anywhere, of any background and at any stage in their work-life cycle.
Member online access/servicing pros and cons – an overview
Information disclosure requirements mean that, even where online is the preference, members must always be offered an individual opt-out that maintains paper-based communications at member request. This is crucial as one size will never fit all.
- Improves data security and exposure. For example, secure access to online platforms avoids unsolicited mail
- Reduces paper, postage and printing costs
- Speeds up communications – emails accessible and instant from anywhere and online account facilitates member self-service
- Retains link to members, which can be lost if member fails to notify of address changes
- Maintaining link via online accounts can mitigate future costs of member address chasing and data quality scores
- Online library of scheme and member documents acts as a ‘pensions bookshelf’. A benefit statement landing on the doormat today may be filed under ‘B for Bin’ but when circumstances change, members will see the advantage of a permanent store of online documents
- Member education – informed members make informed decisions, and online platforms can offer 24/7 access to online tools and learning materials.
- Potentially vulnerable to ID theft if online account is hacked – strict built-in security protocols are required
- Electronic delivery can be less reliable. For example, emails blocked by spam filters or lost in email inbox clutter
- Online accounts require careful password management, which can offset some of the time-saving features of a paperless set-up
- Requirement to provide opt-out to paperless communications - additional work in managing paper and paperless communication processes.
THE KEY THINGS THAT JUMP OUT AT EVEN A HIGH-LEVEL ANALYSIS ARE:
the advantages of an online approach to meeting scheme member needs far outstrip the disadvantages.
the advantages affect all aspects of the scheme and member experience, ticking a lot more boxes than just member engagement. The disadvantages are much more narrowly focused and tend to cluster around technology challenges, all of which are solvable.
Promoting online services
Online services aren’t a magic pill for member engagement, many members will never activate their online scheme accounts in the same way that many members will never open a paper benefit statement. However, our experience has shown that when trustees get behind online services, actively promoting usage to their members, the rate of updates accelerates, reaching upwards of 50% of potential users in timescales that correlate very closely with delivery of employee workshops, newsletters etc.
With member engagement as the ultimate challenge for many pension schemes, having concrete usage stats and feedback is massively more proactive than dropping a letter in a box and hoping for the best.