The leading pensions and financial services consultancy, highlights that there are product design opportunities and technical solutions that providers should be utilising in their digital products that will give consumers much needed financial support. The research showed that members value certainty and flexibility but are not well placed to achieve this alongside the consequences of living longer. To meet these needs providers must use technology and enable members to utilise a range of different products (pension drawdown, annuity, savings vehicles and property) to meet their needs through retirement.
By implementing smarter digital guidance journeys, providers can help individuals to better navigate the complex decision-making process of using their pensions and other assets to meet their needs and manage their risks in a holistic way. Personalised digital retirement journeys should enable many members to easily engage with their retirement decisions through a non-advised channel, supplementing the advised route for those who have more complex needs and access to advice.
The research also outlines how implementing digital tools could help tackle social inequality as those with smaller pot sizes often have lower awareness of their retirement options and are therefore less likely to make decisions that maximise the income they could get.
Around four out of five people with pensions pots of over £250,000 had an awareness of annuities and drawdown, that fell to around half of people with pots less than £100,000 having the same level of awareness. Digital engagement through things such as data aggregation, guidance algorithms and a smart user experience can enable providers to close this gap, by offering clear guidance around financial services and decumulation options for all consumers.
Commenting on the opportunities for Providers to support those reliant on DC Pensions, Paul Waters, Head of Digital Wealth at Hymans Robertson, said: “Consumers need the right support, guidance and protection today; they cannot wait until the future. As an industry that is responsible for delivering good outcomes, a slow evolution in the sophistication of products and support available for individuals to manage their retirement income needs is not enough.
“There are key opportunities for providers to help individuals improve outcomes through retirement. Firstly, by taking a more holistic approach to retirement planning and helping individuals understand how their various assets could be used to help them achieve their retirement plans. Secondly, by providing guidance on sustainable income drawdown levels on an ongoing basis through an individual’s retirement, reflecting both their personal circumstances and changing market conditions. Finally, once Pensions Dashboards are fully operational, building in the ability to have all pension pots in one place allowing for easier assessment of their overall position and a smoother consolidation process.”
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