Excellence in pensions

Martin Palmer
Martin Palmer, Head of Corporate Benefits Marketing, Friends Life

We all fall into the ‘how time flies’ cliché from time to time, but I genuinely find it hard to believe that we are in the eighth year of e-excellence ratings by the Finance & Technology Research Centre. For this year, the F&TRC has changed the rating system to ensure it stays relevant in the 21st century technology landscape. The new system has not brought any change for Friends Life’s rating though – we not only achieved the most 5 star ratings but also achieved first place ranking in Group Pensions. This is brilliant news for us as a company and a strong sign that we are continuing to deliver top quality e-commerce solutions to our distributors and their clients.

It also proves that in a year where we have launched our Corporate Platform and have announced our auto-enrolment hub, we were able to ensure that our efforts were equally focused on our existing proposition, schemes and most importantly our members.

Technology is consistently in fast forward mode and Friends Life continues to innovate to ensure we deliver the solutions the market and our clients expect. Harnessing technology to support workplace savings helps us to apply some new solutions to the growing problem of pension disengagement. But it is not only a question of the right technology – it is key to apply this technology to engage with members in the way appropriate to them. Communications and education around pensions need to be aimed at improving decision-making and increase engagement of the member with their pension savings.

That’s why, drawing on specific feedback from customers, employers and intermediaries, we have further improved our online tools that help members of corporate pension schemes better understand their finances as well as enabling them to manage their pensions online. Members can access tools to help them understand how much they need to save for retirement using for example a retirement budget calculator. It asks them to identify the lifestyle they want in retirement and what they expect their expenses to be – then calculates an income goal for them.

This year auto-enrolment is set to revolutionise pensions as we know them. Engagement and education will become even more important as the government is trying to improve the nation’s retirement savings. Our latest Visions of Britain research* found that awareness of the scheme amongst employees is low, but that some 60% of respondents in employment fear that auto-enrolment might encourage employers to level down their existing pension scheme. Given the tough economic conditions forecast for 2012, this may well be a temptation for some employers. While I don’t believe the industry sees this as a big danger, it is clear that there are a lot of fears and misconceptions out there.

Employers will need to fulfil complex employer duties and many will be looking to technology to make this workable. A ‘hub’ solution that will collect information from employers’ payroll and HR systems, assessing the details against the new rules and determining the pension arrangements required can help with managing the new reforms.

Auto-enrolment will not change that pensions are popular with some of the workforce but fail to engage many of the younger employees. Research we conducted for the development of our Corporate Platform shows that many employees would prefer tax efficient short, medium and long-term savings options in the workplace to pensions and employers want to meet that need. Diversification, flexibility and choice are the real benefits for employees when managing their savings through a corporate platform. Importantly though, we’re not just talking about online access to savings products. The platform enables employees to see all of their financial benefits and manage them. It will also offer a suite of educational modules which will help those employees using the platform to understand how to maximize their tax benefits.

So while achieving excellence for our ecommerce proposition is something that we are very proud of, we know that it alone is not enough: our focus needs to be not only on maintaining this advantage, but also on ensuring that there is a broad understanding of our proposition.

* Visions of Britain, Chapter 6, Friends Life and Future Foundation, 12 – 2011.