IBM is working on a blueprint for a consumer-centric ’citizen’s pensions portal’ that would aggregate details of all of an individual’s retirement savings on a single screen.
The company believes the creation of an aggregated view of all state and private pensions, housed in a portal offering educational tools, would increase consumer engagement, facilitate consumer-initiated transfers and boost competition in the market, while addressing many of the problems of small pots.
IBM says the project could be set up as a public utility and funded by selling product providers market information and access to consumers, whether through decision trees or other means.
The technology provider argues such a portal would be of particular benefit to deferred pension scheme members. It believes issues of data protection and privacy can be addressed.
The model replicates many of the features of a similar system already in existence in Sweden that is currently used by one in four members of the population.
IBM says such a portal is needed whatever settlement is finally reached on small pots and transfers. It argues work on such a portal could be progressed ahead of agreement on a transfer and small pots regime and would bring together pensions savings information for consumers across pillar 1 and pillar 2 entitlements together with education and, in due course, consumer initiated transfer facilities.
IBM is working on a proof of concept, focusing initially on the technical aspects of a consumer centric pensions portal but with the potential to consider potential commercial models.
Faisal Aziz, associate partner, financial services at IBM says: “Increasing consumer engagement is a pre-requisite to achieving the Minister’s vision of “my big fat pension”. Transfers of pots either via pot follows member, aggregator or hybrid models will not by themselves achieve either pots that deliver meaningful retirement replacement incomes or increased consumer engagement. If the process is managed badly, the outcome could be increased complexity and further disengagement of consumers from pension savings.
“The approach we are looking at would provide a level playing field for market and competitive forces to work in favour of the deferred pension consumer.”