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Technology will need to keep up with rapid changes in the pensions world
9 October 2020

Technology will need to keep up with rapid changes in the pensions world

One would be forgiven for not being up-to-date with all the pension changes that have occurred recently, or even over the last decade. State pension age has risen and is continuing to rise; people can now access pension savings freely from age 55 (rising to age 57 from 2028), with only their marginal tax rate to pay; automatic enrolment has brought over 10 million people into workplace pension saving; the Government is applying increasing pressure on schemes to take into account climate change in their investment decisions, and Defined Contribution (DC) schemes have overtaken Defined Benefit (DB) schemes as the main provider of workplace pensions (at least in the sense of active members, though not yet assets under management).

Unpicking the various consequences of these changes for members, employers, pension providers and the Government is a large job, which those of us in the policy world have been working away at. As part of the transition, the Government has brought several guidance bodies together, under the banner of the Money and Pension service (MaPS), in order to provide individuals with holistic lifetime financial guidance in an increasingly complex landscape. And the work that MaPS is doing really gets to the heart of the matter. If industry, the Government and support organisations don’t respond in a sophisticated and nuanced way to all of these changes, then the people that will ultimately suffer are the members who are counting on the system to help them to achieve an adequate retirement income.

I wish I had a simple answer to how we do this. Once you drill down into all the factors which need to be considered, for example, behavioural economics, cost to the Government, cost to industry, support from employers etc. it becomes clear that the ‘answer’ if it exists, is a complex approach, built on consensus which takes into account the (often conflicting) needs of all stakeholders. Clearly, this has and will continue to take some time.

In the future landscape, which, I suspect, will involve a much more sophisticated virtual offering of advice and guidance (supported by the upcoming Pensions Dashboards), and more comprehensive information on the quality and sustainability of investments, technology will provide the infrastructure for each new development. Which brings me to the point of this article.

The design of policy and the development of support will only ever be as good as the underlying technology that provides access. Industry and policy-makers will need to continue to invest in and see technology as an essential enabler for the evolution of the policy world if we are to reach the common goal of developing an affordable system which provides members with sufficient opportunities to achieve adequate retirement incomes.

Notes/Sources

This article was featured in Pensions Aspects magazine October edition

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Last update: 27 January 2021

Daniela Silcock
Daniela Silcock
Head of Policy Research
PPI

Head of Professional Services

Salary: £65000 - £85000 pa

Location: Leeds, West Yorkshire

Pensions Transition Manager – flexible working

Salary: £40000 - £65000 pa

Location: East Sussex

Junior Project Manager 12 month FTC

Salary: £20000 - £25000 pa

Location: County Durham

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