How fintech is set to change workplace pensions

Pensions might be for the long-term, but younger employees want to be able to engage with them in the same way as they do everything else - via an app

It’s no secret that the pensions industry has been slow to adopt technology. So many valuable saving pots are still too often associated with reams of paper that either go unread or, worse still, end up in the bin.

In a world where most of us, regardless of ag, rely on technology to manage much of our lives, it is astonishing that, for many employees, what should be a simple transaction, like transferring one pension to another, involves a manual back and forth process with paperwork and ‘wet’ signatures.

If we’re going to get employees engaged with pensions, improve their financial futures and get the employer some value for their massive spend, pensions have to become digital. It’s an absolute must.

Fintech (or financial technology) is not about look/see functionality or just browser capability – that’s old hat. It’s about being able to do everything that you need to in a mobile app. It’s about making pensions accessible 24/7.

Fintech is about giving pensions a proverbial facelift – moving from an age of passive membership to a new age of active participation. Most of our pensions are now defined contribution schemes that rely heavily on participation and so getting employees the retirement they deserve is heavily predicated on digitalisation.

If we don’t modernise, there’s a future pensions crisis looming.

Do what you need to, whenever you want

We live in a world of instant gratification and shorter attention spans – pensions might be for the long-term, but they still need to conform in some way with user expectation.

Fintech innovation allows users to change contributions, transfer in other pensions and manage and engage with their pension whenever it suits them, through a mobile app. Not everyone works 9 to 5 day and for those who do pensions are something they may want to deal with out-of-hours. A fully transactional app is the only real answer.

Not just for retirement

If pensions are just about retirement there is a massive uphill journey to engage those younger employees who are decades away from retirement.

How about the ability for employees to feel like their money can make a difference today? Cushon research shows that most employees want their pensions to be more aligned with their own values.

This is primarily about the investments, but it’s also about participation.

For instance, how about a voting functionality that allows members to air their views on how companies their pensions are invested in should behave.

It makes even young people feel like they have ownership and their money is making a difference today not just in 30 or 40 years’ time.

Show me the money

Younger employees want to see their savings values in real time and be able to play around with changing retirement dates or contribution levels to see what difference either or both can make to their financial futures. If I see details are wrong they want to be able to correct them, there and then, not having to fill out a form and putting it in the post.

The bottom line is, fintech is an enabler for engagement and engagement is the key to good member outcomes. And that is the what is needed for the retirement that people deserve.