Nigel Peaple
Director of Policy & Advocacy, PLSA
Technology continues to play an ever-increasing role in our lives; now it’s also helping us plan for our retirements.
As the world moves forward, so must the pensions industry.
As an organisation, we recognise that, generally speaking, savers’ engagement with their pension is low. That is why we’ve been working on ways to improve peoples’ understanding of their pension pots and the options they have when they retire.
One way of doing this is through technology and the widespread adoption of our recently updated Retirement Living Standards.
Planning for your retirement
The PLSA’s Retirement Living Standards – accessible to more than 14 million savers through more than 50 different organisations – are a practical and powerful tool used to empower savers to picture their retirement and engage more with their retirement planning needs.
The Standards describe the amount people are likely to spend in retirement, spread across three different levels of retirement expenditure. For single people it is Minimum (£11k), Moderate (£21k) and Comfortable (£34k). For couples it is Minimum (£17k), Moderate (£31k) and Comfortable (£50k) per annum.
They are an engaging tool when incorporated into regular communications such as annual benefit statements, but pension schemes are going a step further. Exciting new technology is enabling providers to personalise the Retirement Living Standards so that they speak directly to individuals about their own savings journey.
Exciting new technology is enabling providers to personalise the Retirement Living Standards.
Technology can improve engagement and outcomes
There are many examples of schemes incorporating the Retirement Living Standards into budgeting or retirement income forecasting calculators.
The best of these tools allows savers to dial up or down in specific areas of their spending – for example, by choosing not to run a car but spend more on holidays – to provide a highly tailored projection of much they will need to save by the time they retire.
Pushing the envelope of what is possible in engaging savers with their pensions, one major provider has incorporated personalised videos into their member communications. This allows members to see personalised data animated on the screen and prompting them to consider further actions.
Some pension providers are even viewing the Retirement Living Standards as a benchmark for retirement outcomes, sparking a change in investment philosophy. By remodelling their default funds (the one most savers use) in the context of targets based on the living standards, providers believe they can better match outcomes with expectations.
