Dashboard, defaults and digital - highlights from the PLSA
This year’s PLSA Annual Conference and Exhibition reflected on positive changes like auto-enrolment, whilst looking to the future and what more needs to be done to engage and simplify pensions and other benefits.
It was my first year attending the PLSA conference, both on the Ferrier Pearce stand and as a delegate. Amongst a sea of colourful stands, it was really interesting to see so many pensions and benefits people all in one place - it’s a small world! With representatives across the industry, all with slightly different skills and perspectives. A team of us from Ferrier Pearce attended the PLSA conference and a number of the sessions. Below is a summary of our reflections over three busy, energising days.
A key message that came out was the success of auto-enrolment. The number of members now paying into a pension scheme has increased considerably which is a step in the right direction. But we can’t relax just yet.
More members are saving, but are they saving enough and do they understand and engage with their benefits?
Richard Butcher from the PLSA noted in his opening introduction that
over 40% of people think that the minimum pension contribution will give them a comfortable retirement.
A large number of people are still not actively taking an interest in their pension savings. They know that money is being paid in each month, but don’t know how it’s being invested and, more importantly, how it will impact them in the future.
One way to encourage members to save more is to provide more default options. This was another key topic that was raised in some of the sessions. Too much choice isn’t always a good thing. The new Pension Freedoms, for example, have given members greater flexibility but also created more confusion. More default options would be really beneficial - if you don’t understand something, a simplified or automatic process would help to cut down on confusion. However, it could also cut out the engagement. When it comes to any form of savings and investments it’s a high risk strategy to just assume everything is fine and not act. Equally, it’s all too easy to take this approach if the process is too difficult to understand. There needs to be a balance between keeping things simple and giving people the tools to make informed decisions.
Simplification across the board is crucial to help people have a clear picture of all their savings. At the PLSA conference, the introduction of simplified benefit statements was announced. This will give a clear process for how statements should be set out and the information that needs to be included. But, simple doesn’t have to be boring. It’s crucial that any communications are personalised as much as possible and draw the reader in so that they fully engage. This includes moving away from just printed benefit statements and tapping into how people access information in their everyday lives i.e via a smartphone.
And bringing pensions up to date with the digital age was highlighted throughout the PLSA conference - making it easier for members to access the information they need and keep track of all their savings. All sections of the industry know that they need to adapt and take advantage of new technologies to encourage people to save more and understand their savings. The Pension Protection Fund (PPF) confirmed that they would soon be launching on Facebook and other social media.
The pensions dashboard was another hot topic and one that has been on the agenda for quite some time. The pensions dashboard will allow members to view their pensions all in one place. Originally set out in the Budget in 2016, the dashboard is due to be in place by 2019, a date which is now looking overly ambitious.
A big part of everyone’s role within the pensions industry is to build up confidence in savings and move away from the more negative perceptions.
David Geale from the FCA commented that trust has to be earned and it's rare to see a headline (about pensions) that doesn't have the word 'scandal' in it.
Ultimately by making pensions and savings more engaging and accessible we can help to build trust between the employer and employee, and help people take more control of their financial futures.
The PLSA conference is a really useful event for finding out what all sections of the industry are doing and to share insights and individual experiences. The sessions didn’t confirm anything revolutionary but rather highlighted the progress that has already been made and what needs to be done going forward. With lots of exciting innovations already available it will be exciting to see the pensions landscape change over the coming years. Watch this space….