In the UK, we are facing a serious problem. 65% recognise that they need to save more for the long term. More seriously however, of those who have already made provision, there is a real lack of engagement with their pensions as evidenced by the thousands of ‘missing' pensions, and the apathy when it comes to retirement about finding the best deal through the open market option.
The provision made during your working life has to support you throughout the whole of your retired life – yet very few seem to care about this. Thankfully, there could be light at the end of the tunnel. Who is to blame? First, we should look at the cause. We Brits are traditionally not very good at preparing for what life might throw at us. From the oft-quoted £3bn Protection gap[1][1], to the £27bn savings gap[2][2], we don’t seem to want to think about our financial future. This problem is only exacerbated in the current economic climate. With the threat of job losses, the yo-yoing of prices for the daily staples and the ever-increasing utility bills – people have enough worries over the financial present which is leading to deferring those long term decisions. As a Financial Services industry, we don’t make life easy for ourselves either. The world of pensions has a confusing lexicon of its own; who knew that an annuity is what provided your retirement income rather than a pension before joining the industry – and who could commonly tell you the difference between protected rights and non-protected rights, and what the Government Actuary’s department and a crystallisation event were? And finally – providers are equally to blame. We could easily be accused of hardly making pensions exciting. Only receiving a statement once a year is unlikely to make you sit up and want to find out more about something which may not come into use for you for another 30 years. So what can be done? There seems to be two key areas that pension providers can help to tackle: interest and education. Norwich Union is improving its provision on these points by creating the Pension Tracker – putting their customers’ pension plans online so they can be regularly accessed, understood and managed. Pension Tracker offers several key functions: The all-important question – how much might my pension pot be worth at retirement – can be answered and visualised online. Estimates of the size of the pot are given in a graph which highlights different outcomes depending on different market conditions. A retirement planner allows customers to see what difference making changes could mean in monetary terms. What could happen if they retired 3 years later? What if they increased their payments by (for example) £50 per month? What if they didn’t want to take tax free cash? Those changes that are relevant now can then be immediately requested online. Customers can view a rounded picture of the pension. Plan value, payment information and investment breakdown. This means the pension can be truly understood. All this comes in clear, everyday language and images. There is more help in the form of Lisa, our guide to the whole site. She can explain everything from what a pension is, to what each chart is demonstrating. This makes how customers manage their pension plan like how they manage their bank account online; fully accessible, easier to understand and with the ability to make changes that will affect their financial future. However we are not just providing access for customers. Advisers will have full access to everything their customer can see as well – via the secure section of Norwich Union’s Adviser Sales Centre. The real benefit of this is that Pension Tracker can be used in review meetings - the pension can be viewed in detail and changes can be requested there and then on-screen. Pension Tracker is open to new customers purchasing an individual Norwich Union pension or becoming a member of a new Group Personal Pension from February onwards. Over a million of our existing customers will be getting access later in 2009. For more information, and to try a demo of the site, visit www.controlyourpension.com/adviser Advisers can login directly from secure section of the Adviser Sales Centre Paul Goodwin is Head of Pensions Marketing for Norwich Union
