Pension Funds Insider

Pension Funds Insider brings the latest pensions news and industry insights; from investment and governance updates to new mandate appointments and pensions regulatory information.

D for Digital

Image for D for Digital  pension funds

 It’s difficult not to pick up a document which doesn’t refer to Covid-19, but one of the things it’s served to highlight is the next letter in the alphabet – D for Digital. 

We’ve all seen the power of digital solutions become absolutely pivotal to our methods of managing this crisis. But of course, these are not new tools. Much like the two world wars changed the social order and the rightful expectations of working women, the current crisis will also lead to far reaching changes. As yet only some are visible.

Not that long ago I’d regularly hear sponsors, providers and trustees say members won’t heavily engage with digital tools. Most still wanted to receive paper and speak to real people – ideally face to face. Since spring, things are beginning to change – this was of course forced upon them but they have responded well. As you might expect, some people new to online meeting software have had their eyes opened and, crucially, their priorities changed. It’s not a complete reversal though, there are some meetings that should be continued’ face-to-face. But the inevitable compromises of this ‘new world’ mean some of the changes are easier to bear than we might thought just a few months ago.

Now, for all those organisations who can state they have online facilities for pensions… be careful not to get too self-congratulatory. The digital journey is exactly that, and the tools we have now may not be best of class, up to date or as robust as they need to be to deal with industrial volumes – but they are an important start.

The best pension schemes are on their third or fourth iterations of web capability and may focus on the member to the exception of the sponsor or indeed vice versa. Whereas these are tools all parties need. The way users register and log on has moved on massively, especially for users who find the whole process challenging. Moreover, it’s not just the functionality. Recently I had a discussion with a digital specialist about how support has changed too.  They’d been treating a web outage as a priority 2 incident on the basis that phones, people and paper were still available as the primary transactional and communication tools. Now many consider the reverse to be true, so a mind-set change was required.

As for the tools themselves, they’ve followed a journey a bit like Satellite Navigation in cars. Early versions sat on a suction cup on the dashboard, or mechanically presented a ‘surprise and delight’. But a tiny screen from a tiny post box on top of the dashboard when the ignition was switching on didn’t make for a great user experience. Now of course we have huge touch screens and sensors predicting oncoming bends transferring power between wheels to help the ‘numpty’ driver (me) get the car safely around these bends.
In our world, we’ve moved from static ‘library’ websites chock full of unstructured scheme information to more intuitive digital member journeys with integrated planners, online educational videos and a host of other tools to help members engage and learn in a different way. The very best of these advances came from the study of how the users interacted with the digital support provided.

In this series of blogs PASA has covered governance developments, Pensions Dashboards and of course Data. It shouldn’t be a surprise these all integrate well and are crucial supports of digital developments. Initially, and I speak as a person who rolled out online real-time investment switching back in 2001, the focus was very much on DC.

This was no accident. Digital seemed to be particularly relevant to DC and providers were aligning services to the new world of products with regulated pricing such as Stakeholder pensions, and latterly default fund costs. Cost pressure forced the application of digital tools and this became even more important once auto enrolment landed, with the importance of data shuttling around the pension and payroll universes to enable assessment and regulatory communications to operate in super swift processes. Necessity was the source of innovation, not unlike our current situation.

DB schemes tended to follow at a lag, sometimes because they’re dominated by deferred members and pensioners who we assumed might be less likely to go online, but we were wrong.
The eagle eyed know this was also driven by the quality of data and the levels of existing calculation automation. All of these are now much more accessible to DB schemes and members of any age (or even perhaps the person with power of attorney) want, need and demand digital tools.

However, digital remains a journey, an iterative path which will continue to develop and must develop in line with its users’ needs to be successful in fully engaging people with their pensions.          
Paul Sturgess, Board Director, PASA