Daniel Taylor explains that administrators should be doing more for members online.
The arrival of Pension Dashboards in 2019 will have many effects on the pensions industry. If it's successful, and we all hope it is, then member engagement should increase, financial advice costs should fall and outcomes should be improved by members being driven to make more active decisions about their pension.
For administrators, this points to one very predictable outcome – increases in member activity levels, resulting in larger workloads.
As members and advisors engage more with their pensions, then levels of enquiries, illustrations and information gathering will increase, along with actual transactional events such as transfers, fund switches and the exercising decumulation options.
The lesson we have learned from the introduction of pensions freedoms is that we shouldn't think this is going to be a spike or peak of activity that will tail off - hopefully, Pensions Dashboards will lead to a long-term sustained increase in member activity.
It probably seems counterintuitive for a pensions administrator to be welcoming an increase in workloads. But I firmly believe that administration is and should be about protecting and promoting the interests of members, which are best protected when they act to protect and plan for their future. It's the action part that now needs the attention and creativity of the administration market.
A pervasive belief that Dashboards will fill a digital engagement hole for pension schemes is emerging. Comments like "we should wait for the Dashboards to be launched" and "the Dashboards will make member websites obsolete" suggest that trustees and sponsors are misunderstanding the capability and effect this new development will have on members.
Trustees need to understand that the Pension Dashboards will not deliver, replace or negate the need for a broader digital engagement strategy.
In fact, it will do quite the opposite. Pension Dashboards will drive up demand for more digital solutions from scheme members for two reasons:
1. The success of Dashboards should be measured by member action. Viewing pension savings is simply not enough, nor should it be the end of the process. It is the first step in what should be a resulting string of follow-up actions. Action is what we need but the Dashboards don't deliver action, they publish information.
It is direct interaction with providers and schemes where the action takes place. Once a member has viewed their pension savings they will need to contact schemes to take follow-up actions, gather more information or ask further questions. This action is going to drive up activity and the only way to handle that, in a cost-efficient way, is to also start delivering those action stages online.
2. The arrival of pension Dashboards will quite rightly start the member engagement journey online. But where do members go after they have viewed their pension on a website? With many schemes still not providing any type of online engagement, they are going to turn to a manual paper driven system of information exchange.
Slow, expensive and outdated, we run the risk of losing member interest once they've engaged online if we must turn back to manual paper driven processes to get more information directly from their providers. Let's start how we mean to go on and use the arrival of Dashboards to continue to member journey online.
The most referenced reasons for schemes not doing more for their members online is that "it's too expensive and we can't justify it". Online engagement platforms should not be expensive to implement.
Good administrators should be supplying them at little or no cost. If implemented well, they will reduce workloads and operational overheads so why should you be paying your administrator extra to supply them? Do not accept unreasonable costs from your administrator for supplying something that should save them work and improve member outcomes. A good digital offering should be a fundamental part of any administrator's arsenal.
Excuses such as "our members won't use it" are often based on anecdotal evidence or, even worse, based on solutions that are poor, make the registration process too difficult or don't give reason to return to the website. Almost everyone is online, so if pension scheme members are not engaging more with schemes or benefits in this way, then perhaps that's because the available solutions have simply not been good enough.
The advent of Dashboards presents both opportunity and risk for administrators and trustees. The risk is thinking that they're going replace or remove the need for schemes to do more online.
The opportunity is that they will set the tone and channel for how members engage with their pension, which we can capitalise on to reduce the operational burden of a more engaged population.
Trustees and administrators need to start thinking about what members will do after Dashboards go live. As Dashboards help members start planning for a better future, administrators and trustees should be doing the same, by starting to plan for more efficient and productive digital future for their members.
Daniel Taylor, Client Director, Trafalgar House.