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We have seen increasing interest from trustees keen to promote the use of online portals by members, for both defined benefit (DC) and defined contribution (DC) schemes. Sophisticated pension modelling tools have enabled members to undertake more holistic planning. In addition, improved functionality has meant that an increasing range of transactions can now be done online (e.g. real time transfer capability).
The wider use of online portals has allowed members to more easily access information about their scheme, better understand the benefits they have and, with improved modelling tools, have a clearer understanding of the benefits they are expected to achieve. This then helps people to plan accordingly and take positive, informed action.
Member engagement can also be maintained through automatic nudges which can deliver key messages that are targeted to an individual. This helps to maintain awareness and drive positive member action.
By providing an engagement portal with a suite of education and modelling tools, the trustees are also fulfilling their duty to members in giving them the tools needed to make informed decisions. If a complaint is made, engagement portals can provide evidence of what has been communicated to a member and track what they have accessed.
Finally, by linking engagement portals with administration systems, members can be encouraged to use different self-service tools. This is vital to maintaining and improving data quality (the corner stone of delivering relevant engagement) as members can easily view and update their data. Furthermore, administration becomes more efficient as more and more tasks can be automated with members driven online.
The true benefit of engagement portals is in its ability to deliver targeted, relevant messages to an individual, making sure that key take-aways are not lost within other messages. Effective targeting can be done even on basic data, such as the individual’s age. This can be used using as a starting point to help gain a better understanding of what their key objectives and focus will be.
Even if basic data isn’t available, the engagement portal itself should be intuitive for the member to find the tools and key messages which are most important to them. Where nudges have to combine messages because the data isn’t good enough, messages should be kept clear and succinct so it’s easy for an individual to identify what is most relevant to them.
If data is a concern, make sure that the invitation, registering and logging in process is as simple as possible and that the data requirements are as light as possible.
Members can be encouraged to review, update and complete key data items online. However, this should not be at the expense of the user journey and members being disengaged.
Allowing members to update their information online is an effective way to improve data accuracy. One way of encouraging this is by providing single sign-on links to the member’s online account with the administrator. In this sense the engagement portal should be independent of an administrator, provider or product – with the engagement portal used as the front layer to schemes where there is more than one administrator.
It is important, however, that any encouragement to input or update data does not disrupt the engagement journey. If the portal asks for too much information soon after log in, the member will be disengaged and not use the platform, ultimately meaning they neither learn nor update their data.
Online engagement portals should not replicate the functionality and purpose of other administration or investment systems (unless the administration and engagement portal is one and the same). Otherwise, this could cause confusion to members and cause data-sync issues. Having a clear line between independent education and action (particularly if that involves a purchase of a product) also protects the trustees.
Instead, the engagement portal should focus on providing the independent education and engagement which delivers key messages and provides tools to help members make informed decisions. This provides support to make it easier for members to plan for their retirement and access their pension.
An engagement portal should allow the member to gain a holistic view of their retirement savings, across both DB and DC schemes. This avoids decisions being made on benefits in isolation without truly appreciating the impact on the member’s overall position. The tools provided should include those major options and decisions which members can make with their benefits. For DB schemes this would include early and late retirement and commuting DB to cash. For DC schemes this would include the ability to use cash, annuity and drawdown in conjunction with each other at multiple ages.
Engagement portals should focus on income throughout retirement, not just on the starting figure. They should allow members to make a plan and shape that income throughout their retirement, using the options available to them.
Above all, the education and messages should be impartial, trusted and independent of any product or provider.
The Pensions Dashboard is coming, but not quick enough, and it will still require administrators (especially for old DB schemes) to update their systems and even be required by legislation to provide data.
Having a holistic view of not just a member’s retirement finances, but also of their holistic financial situation, is key to making better informed decisions; whether that is to solve debt problems that may be a barrier to saving for retirement, or looking at all sources of income and funds that could be used to fund retirement.