Paul McGlone’s last op-ed as president of the Society of Pension Professionals sees him make an impassioned plea not to abandon hope and impetus behind the dashboards project, a once-in-a-lifetime opportunity to solve the industry’s engagement problem.
That topic was member engagement, and as the group all nodded and agreed that better communication and member engagement was really critical, one voice in the corner quietly said: “We’ve been saying the same thing for more than 30 years.”
So how can we solve this when we have clearly not managed it thus far?
It is precisely because the dashboard project is not easy that it needs the support of the industry
Member engagement and member experience are pension challenges as old as the industry. There are islands of excellence but, despite our best intentions, they are surrounded by a sea of mediocrity.
This is compounded by the fact that the users of pensions are generally not the buyers, and there is a gap between what the users want – or at least what we think they want – and what the buyers are prepared to provide.
It is a version of the old chicken-and-egg question. Are members disengaged with pensions because the experience they received is not great, or is the experience we provide not great because buyers are not prepared to pay for better when members are just not engaged?
Chance to show value of pensions
Whatever the answer, I believe that over the coming years we have a way to tackle these stubborn issues, as we finally see real progress on the pensions dashboards.
The dashboards have the potential to be a game-changer in our industry. It will not change what pension professionals do day to day, whether that be valuations or investment strategies, legal advice or covenant assessment. But it could impact hugely on the people we do those jobs for.
It should allow pension savers to get information more quickly, reunite them with lost pensions, see multiple schemes at once, and get a feel for the size of their benefit. All of which should lead to members being able to make better and faster decisions.
In short, it could improve member engagement and experience in a way that, for more than 30 years, most schemes have only been able to talk about.
DB presents toughest challenge
Of course, it will not be easy. The recent documents on data standards issued by the Money and Pensions Service are helpful, but also remind us how difficult this is.
The challenges around data are well known, and the suggestion of an ‘estimated retirement income’ for defined benefit schemes raised a number of eyebrows.
In a recent Society of Pension Professionals poll, while 75 per cent of SPP members said that defined contribution schemes could provide that quickly and easily, the equivalent for DB schemes was under 20 per cent.
The vast majority said that ERI for DB schemes needed substantial work, and the estimated timescale to provide it was around one year longer than for DC schemes.
But it is precisely because the dashboards project is not easy that it needs the support of the industry. It is all too easy for experts to pour cold water on the idea of a dashboard or the implementation, whether it be concerned about data, or the ERI, about the functionality, or scope or security.
But unless those comments are accompanied by practical suggestions, they do not help the project to succeed – and I suspect that most of us want to see this succeed.
Pensions will remain after Covid-19
Finally, no project can be progressed at present without considering the impact of the Covid-19 pandemic. But fundamentally nothing has changed.
Pension schemes will outlive the pandemic, and the age-old challenges of engagement and experience will remain. In fact, in a stressed economic environment the ability to understand your pension scheme is probably more important than ever.
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In this, my final article as SPP president, I would ask the industry to stay positive as the dashboards are developed. By all means challenge, I certainly will. But let us try to do it constructively.
I believe that this is the best opportunity in a generation – perhaps the only or last opportunity for many of us – to really move the dial to engage people with pensions.
Paul McGlone is outgoing president of the Society of Pension Professionals
