Local authority schemes expect modeller to boost engagement

LGPS reforms come into effect on April 1 and centre on changing the benefit structure to one based on career average. Benefits will be adjusted annually to meet the rate of the consumer prices index.

The pensions modeller was launched this month and aims to help members calculate their benefits under the reforms (see screenshot below). 

The modelling software also allows members to see what effect halving their contributions would have on their pension. It is hoped by some schemes that the choice will help to reduce opt-outs by members who feel their default funds are too expensive.

“We have made our members aware of it and hope that members may consider it as an option rather than opting out,” said Antony Ellis, communications officer at West Midlands Pension Fund.

Schemes are also making members aware of the upcoming reforms to minimise fears over the effect changes will ultimately have on their pots.

“The members want to know what effect the changes will have,” said Phil Gledhill, client liaison officer at Lancashire County Pension Fund. “We think it will prove popular.”

Gledhill said the Lancashire fund has been attempting to drive engagement with their members through an educational roadshow, supported by an online helpdesk and webcasts.

It is expected the tool will help improve engagement, as some members are likely have concerns about the reforms.

“Because [the LGPS modeller] is driven around a change to the scheme they have higher expectations of engagement,” said Karen Partridge, chief business development officer at communications consultancy AHC. “The members have a fear of what’s going to happen in the change.”

The rise of online portals

Many schemes undergoing the LGPS reforms already offer online tools allowing members to calculate changes to their benefits in real time.

“The West Midlands Pension Fund has a self-service web platform where members are able to make real-time changes to their pension records. This service also includes a pension estimate function,” said Ellis.

The fund’s web platform has proven popular with members, attracting a 300 per cent increase in registered users over the past 12 months, he added.

The Lancashire pension scheme provides its own modeller to help members calculate their benefits, but it is awaiting government guidance on how these benefits will be calculated after the LGPS reforms come into effect, Gledhill said.

Actuarial guidance for the LGPS is being produced by the secretary of state for communities and local government following a consultation with the Government Actuary’s Department. The guidance is expected to be released around the same time as the reforms come into effect.

Modelling software has been praised in the past as an effective way to fuel engagement among both employers and employees. But concerns were raised that usage of self-service pension websites remained low across the board.

Promoting modelling software is an important step in ensuring member engagement and preventing low usage, said Partridge.

“You need to promote the fact there’s a modeller on the website – you can’t just put it there,” she said. “If you’re going to use one you should do a promotional campaign to show people how to use it and what you can do [with it].”