The innovations driving pension and savings engagement

What innovations are driving pension and savings engagement and what areas do scheme holders still need to be wary of?

Technology is supporting and enabling savers and pensioners to be better engaged and informed around their pensions.

AI tools

Artificial intelligence now plays a key role in how many people engage with their pension. According to Lloyds Banking Group over 28 million UK adults are using AI tools like Claude, Gemini and ChatGPT to help manage their money. That’s 56% of all UK adults. Of those users, 39% used it for financial planning, which could include decisions around their pensions.

This isn’t inherently good or bad. It’s notoriously difficult to get pension scheme members to engage with their pensions and any tool that improves interaction is beneficial.

Using AI as an educational tool to understand choices may well be preferable to those who haven’t done any research on their retirement options, rather than choosing something that poorly suits their retirement needs because they have little understanding.

However, member communications should still urge caution to savers using AI for financial planning. It’s important that pension scheme members know AI tools, while useful for explaining general terminology, may not understand personal circumstances, specific scheme rules or the latest law. They can put personal data at risk and give answers that sound confident but are incorrect.

This can be confusing and frustrating for members and, in the worst cases, lead to poor, irreversible decisions. Trustees and other pension scheme stakeholders should, where possible, signpost towards regulated financial advisers.

Pensions dashboards

Driven by factors like auto-enrolment and increases in how often people change jobs, the number of pension pots valued at £1,000 or less is increasing. In 2023 there was over 12 million of them. Savers can have multiple pots and it’s easy for individual schemes to get lost.

The Pensions Dashboards Programme is new Government technology to help savers keep track.

This online tool will allow people to see all their pensions in one place automatically, with all schemes with 100 members or more legally required to connect to the system and some smaller schemes connecting voluntarily.

Seeing a complete picture of all savings in one place will help savers realise what they have in total, informing decisions made at retirement and, in some cases, prompting increases in pension contributions before retirement.

Schemes have to connect to the dashboard by 31 October, ahead of its rollout in the following months, giving people an easy way to engage with their pensions in one place.

Don’t shy away

New technology that’s changing the way people interact with their pension is here. The key for pension scheme stakeholders is not to avoid it, but to better inform scheme members on how to use it safely and effectively.