The Pension Dashboard is on its way – are Britons ready? asks Andrew Megson, Executive Chairman, My Pension Expert
Over the previous two decades, financial technology (fintech) has become commonplace in Britons’ financial management.
From digital banking and challenger banks, to online investment platforms, today, an overwhelming majority (76%) of UK adults use online banking to manage their money. To compare, just 42% of the adult population used such technology in 2010.
Undoubtedly, the COVID-19 crisis has accelerated this trend. As individuals were bound by strict ‘stay at home’ measures, many were unable to visit their local bank branches. As such, the majority of individuals have been forced to shift to digital banking throughout this period – so much so, that use of fintech apps increased by 72% throughout the pandemic, according to a recent study from deVere group.
Although the use of fintech is popular when it comes to managing day-to-day personal finance, there is one area where these developments have yet to filter down: namely, pension planning.
Government initiatives
Fintech could offer many benefits for Britons’ retirement financial management; for example, helping people to track down lost pensions. This would certainly be useful for a significant proportion of the population; over a third (34%) of adults admitted to losing track of how much they have saved into their pensions, according to recent research from My Pension Expert.
Significantly, the Government sought to grant Britons better access to such fintech, pledging to launch a Pension Dashboard, which is touted for a 2023 launch. The platform promises to store information regarding an individual’s various pension pots, which up until now has been an issue for many Britons – many of whom will have accumulated a number of pension pots throughout their careers, only to lose track of them later down the line.
Logic would dictate that the platform would be in strong demand amongst pension planners looking to effectively track down and manage their pots. Surprisingly, however, the vast majority appear to be remarkably disengaged from such developments.
Britons are disengaged with retirement fintech
My Pension Expert’s aforementioned research found that shockingly few (20%) understood what the pension dashboard is and how it would work. Indeed, just 16% of respondents believe the Pension Dashboard will change the way in which they engage with their pension. Only a fifth (21%) feel it will help them to track down lost pensions.
This disengagement is not just associated with public sector fintech projects.
The majority (60%) of respondents to My Pension Expert’s survey stated that they were opposed to their personal pension provider introducing new technology to help them manage their pension online.
Whilst technology has the power to transform the ways in which individuals engage with their pension, there is a clear hesitance to incorporate it into retirement strategies. As such, it is vital for the pension sector, and the Government to understand and address the causal factors or this hesitance.
Fear of the unknown?
One point to consider is that some individuals will be set in their ways when it comes to adopting tech more generally – let alone fintech products. Particularly for older members of the population who may not be as IT literate, the thought of moving over to online platforms to manage their retirement finances might be daunting.
Likewise, those more comfortable using tech, a lack of trust may be the crux of the problem. For example, some may be concerned about potential data privacy issues involved. For others, more specific issues surrounding regulation and sector scandals might be at the heart of their reservations – and put simply, these qualms will do nothing to calm the nerves of individuals who might already be wary about financial management.
A changing landscape
Clearly, more education and support are required to ensure that Britons are clued up about the many benefits that fintech can bring to the fore when it comes to managing their retirement finances.
In the case of the Pension Dashboard, responsibility must ultimately lie with both the Government and pension providers to ensure that pension planners are aware of all the benefits new fintech developments, such as the pension dashboard, could bring to retirement finance management. Likewise, resource should be dedicated to ensuring savers have the necessary IT skills to use the platform; hosting online tutorials with could be a strong starting point for this.
That said, the key to retirement fintech success lie within convenience. So, making online platforms as easy to use as possible to use and access will be vital. After all, 87% of people aged 55 to 64 were reported to use a smartphone in 2020, suggesting that they are comfortable with using convenient mobile apps. As such, pension providers, and indeed the government, could consider converting pension management tools into simple apps to ensure their pension information is as easily accessible as possible.
Absolute transparency will be key in the effort to assuaging these concerns, keeping individuals engaged with fintech, and ensuring that they feel in control of the fintech they use, rather than fearing it. Ultimately, innovations like the Government’s dashboard will afford many pension planners the opportunity to get to grips with their pension and even recover lost pots – a sure-fire way to ensuring financial stability in retirement for those who need it most.
Andrew Megson is the Executive Chairman of My Pension Expert. Founded in 2010, My Pension Expert specialises in providing independent advice to UK consumers about their pension plans.
