Thrive in the pension (r)evolution

Tackling the main pension challenges with a room full of employers provides fascinating insights.

I was thrilled to host our employer event at the iconic Lords Cricket Ground at the end of March, and wow, was it packed with insights.

We really got into the detail of the fast-paced changes happening in the pension industry, covering everything from the pension policy landscape and industry trends to the rise of pension dashboards and AI. The discussions were lively and super engaging.

Everyone in the pension community – employers, providers, members, and the Government – is facing new challenges and we spent the day brainstorming innovative solutions. 

The event, themed ‘The evolution of pension innovation – a double century in the making,’ was a nod to our rich heritage as a provider, as well as the Lord’s Cricket Ground venue. 

We had fantastic sessions that tackled the main challenges head-on. Pension dashboard experts Chris Curry and Richard Smith shared their thoughts on what these dashboards will mean for members and employers. They’re being called a game changer for pension engagement because they’ll let members see all their pensions in one place, starting with the Government’s MaPS site. The session was a hit and sparked much discussion. 

Dashboards are already being used in countries across Europe where millions of people regularly log in to see how much they’ve got saved; and there’s every reason to anticipate they’ll have the same impact in the UK, Chris and Richard explained. One thing is likely; we all need to be ready for the expected surge in employee interest in their workplace pension. 

We already know that enabling members to see everything in one place enhances engagement. Scottish Widows members who bank with Lloyds Bank, Halifax or Bank of Scotland can see their pension next to their bank account every time they log in to their app, and we know they do this on average 26 times a month. With over 40% of the UK adult population banking with one of these brands, it’s a fantastic way to maximise reach and engage the unengaged.

Harnessing AI

AI is a hot topic across all sectors, and pensions are no different. We shared how we’re already revolutionising the member experience, using AI to create personalised engagement with our video content, pension mirror, and gamification strategy. 

This has driven great member action, and we’re excited to keep exploring how AI can bring efficiencies to our operations, all while being careful and keeping guardrails in place.

Judging by the reaction, AI has clearly caught the attention of employers. They’re keen to learn more about this technology that’s still fairly new but holds a lot of potential. It’s an exciting time, and we’re just getting started.

Ever-evolving pension policy

Then there’s the excitement around the constantly evolving policy landscape, not least as the Government is interested in industry consolidation. The idea is that fewer, bigger providers of scale can offer greater value for members. 

They’ve suggested providers will need to have £25-£50 billion AUA to keep operating – and with £107 billion AUA we’re comfortably positioned to meet this requirement. This is likely to lead an industry shake-up, with some providers unable to meet the scale requirement and potentially exit the market. 

There is also excitement around a new innovation from the FCA.  A new proposed new framework for helping pension savers make good decisions and stay on the right track has been proposed. It’s called ‘Targeted Support’.    

The new framework will allow pension scheme operators to suggest courses of action which could improve the way that their pension pot grows in the run up to retirement, or which could help them make the most of it during retirement.

Investment innovation is crucial

Our investment innovation session was a particular favourite as we delved into the exciting launch of our brand-new, flexible, and innovative default investment strategy, Scottish Widows Lifetime Investments. 

Designed around our members’ behaviours and needs when reaching retirement, Lifetime Investment – the new default fund – is available immediately for our new clients and for all customers on a self-select basis. Existing clients who are currently invested in one of our Pension Investment Approaches (PIA) will also transition to the new default, ensuring that they too can benefit from the enhancements. 

Looking ahead

One thing is clear, the pension industry isn’t standing still, and the Scottish Widows Workplace Team isn’t either. We will continue to evolve, and find ways to solve challenges, driven by technological advancements, innovative providers, and policy reforms – and that’s a great thing.

Find out more: The Richard Smith, Chris Curry and Robert Cochran discussion on pension dashboards will be available as a podcast on Scottish Widows Workplace podcast channel.