Experian revamps pension comms as over-50s face pandemic sting

The credit-scoring specialist sponsors the Experian Retirement Savings Plan, which has 9,200 members — from which 3,300 are active savers — and one in four are individuals aged over 50.

The trust-based plan, established in 1998, offers two lifestyle options and 11 self-select funds.

Like most companies dealing with an unprecedented situation created by Covid-19, Experian had to change its way of communicating with its scheme members, since face-to-face seminars and workshops were no longer possible.

Far from gaming the system to obtain tax relief, people in these circumstances are making what appear perfectly logical choices to tide them over a period of unemployment and it seems unfair to penalise them

Kay Ingram, LEBC Group

The company converted its existing retirement education programme to be 100 per cent available online, offered in conjunction with Wealth at Work to active members who were nearing retirement.

A web-based workbook and digital tool are on offer, as well as a helpline, and members about to retire can access a one-to-one guidance session with a retirement expert.

Experian has also updated its guidance to members on its website and provided a webcast with a range of financial tips and insights to help people through the pandemic.

Pandemic drives up demand for pensions guidance

Lesley Sutherland, group pensions manager and head of pension projects at Experian, believes the need for support at retirement has been increased by the pandemic.

She said: “We found registrations and attendance at our seminars increased from the same sessions in 2019. Making them available online definitely helped, but it was obvious there was a Covid effect.”

Sutherland noted that the industry has seen “record numbers of people accessing their pensions since the pandemic”, with individuals aged 55 and above considering using their pension savings to supplement their income.

Data from the Institute for Fiscal Studies, published in October, showed that one in eight older workers have changed their retirement plans due to the coronavirus, with a third of these being in a worse financial situation than before.

Sutherland added: “This is why our retirement programme addresses these issues and explains the pension pitfalls that many face, so that Experian staff are well equipped not to make any of those costly mistakes.

“Overall, the feedback we get is that we’ve helped make our members think a bit harder about their plans and options and that has got to be a good thing.”

She noted that one of the most popular topics with members is how they can best convert their retirement savings into income each month.

“Many don’t realise the tax implications of accessing their retirement income and are surprised by the action list that they come away with after a financial education session,” Sutherland said. 

Demand was strong for one-to-one guidance after the workshops, with between 70 per cent and 80 per cent of attendees making contact to discuss their personal financial questions. Of these, more than 50 per cent went on to meet a regulated financial adviser, she noted.

Other companies have had varying degrees of success in coping with the pandemic. Damian Stancombe, partner and head of creative agency DrumRoll at Barnett Waddingham, noted that for some employers it has been relatively easy.

“Those, for example, who have employees working from home and are effectively replicating how they would work in an office, can make optimal use of email and webinars,” he said.

“For others it’s been much harder, where employees don’t have access to work computers or have been furloughed, employers have had to work much harder to reach their people.”

Stancombe added: “We’ve seen some innovative approaches, from webinars hosted from garden sheds to postcards sent out to home addresses — the key is straightforward communications that offer reassurance at a time of unease.”

But many put such actions on the ‘too-difficult pile’ and bet on inertia results. Jonathan Watts-Lay, director at Wealth at Work, stressed: “There are too many people out there who don’t believe engagement works. They use old models. They use the written word.

“They put stuff on the company intranet that no one ever reads, or they go down the route of saying we will just use digital, normally due to costs, and they think it will save them loads of money but it doesn’t deliver them the end result.”

Watts-Lay explained that the ideal solution “is to have a combination of digital and human interaction”.

“That interaction can be face to face, over the telephone or virtual. As long as you have those combinations, people actually do get engaged,” he explained.

Complex tax rules deter engagement

Complex pension rules also deter engagement, according to Kay Ingram, public policy director at financial adviser LEBC Group.

She said: “We have three different regimes — defined contribution, defined benefit and the state pension — and each has its own unique set of rules, in some of which the money purchase annual allowance, guaranteed minimum pensions equalisation and the annual allowance trap for DB members act as a disincentive to save and confuse the member.”

In particular, many would like to see the MPAA increase to £10,000 from the current £4,000, especially in the wake of the pandemic, which has seen many older workers lose their jobs years before their state pension will commence.

Ingram pointed out: “Few consumers are aware of the devastation that withdrawing more than the tax-free cash can cause to their future savings opportunities and only realise when it is too late.

“Far from gaming the system to obtain tax relief, people in these circumstances are making what appear perfectly logical choices to tide them over a period of unemployment and it seems unfair to penalise them.”

In the past, a lack of pensions knowledge was not a problem, with final salary pensions and the state pension pretty much looking after themselves.

Now that people are expected to take an interest in how much they are building up and what to do with their money when they retire, this has “become a real issue”, noted Simon Grover, director at Quietroom.

He noted that “the vast majority of people don’t really want this responsibility, and would like it to be all taken care of” for them.

“In other words, they’d like someone to make sure they are saving enough, and that they move seamlessly into receiving an income for life when they retire. No one requires you to design and build your own house,” he said.