Just Group aims for increased education on DB freedoms

The new business, named Hub Pension Solutions, will allow a scheme’s appointed financial advisers to generate real-time transfer value analysis reports after a targeted member expresses interest.

Previously, schemes have had to order costly transfer value analysis reports for every member in the scope of an exercise, in the knowledge that not all will take up the offer and that assumptions on factors such as retirement age will diminish the reports’ utility. Just Group estimates schemes could save 50 per cent of these costs by moving to a digital platform.

As a trustee it’s much easier to monitor a subcontracted adviser if they’re providing the service as part of a project

Alan Pickering, Bestrustees

Projects informing members about their options at retirement have typically been seen as an opportunity for sponsors and schemes to cap their liabilities. But in the fallout from cases of ‘factory gating’ at steelworks in South Wales, more and more experts see boosting understanding of benefits as part of a trustee board’s duty.

“When freedom and choice came in in 2015… trustees could no longer walk away and say, ‘It’s not our responsibility’,” said Stephen Lowe, group communications director at Just. “I don’t think there’s a choice now, you have got to show up and give your members a better understanding.”

Adviser tool doubles as member education

Hub Pension Solutions, which is set to undertake its first exercise with a scheme in the near future, also allows members to assess their options at retirement, exploring variables such as retirement age and how long their money will last under various drawdown assumptions.

Members considering a transfer out of the scheme are then directed via the platform to the scheme’s appointed financial adviser.

That an adviser appointed by trustees still stands between the member and a full encashment of their benefits should give trustees the confidence to educate their membership about retirement without spurring a slew of ill-advised transfers, according to Graeme Riddoch, director at Hub Pension Solutions.

“Ultimately you have to go to an adviser,” he said. “All this is designed to do is to get people to a foundation level of understanding.”

Trustees must inform members

Some trustees and sponsors have understandably been reticent to provide guidance to their members, for fear of being seen to push their members towards a transfer.

The Financial Conduct Authority found last year that fewer than half of DB transfer advice processes are “suitable”.

Nonetheless, said Alan Pickering, chair of professional trustee company Bestrustees, trustees should try where possible to educate members, and should embrace liability management exercises as a way to do so, in a way that manages the risk to savers.

“As a trustee it’s much easier to monitor a subcontracted adviser if they’re providing the service as part of a project,” he said.

Whether using a traditional exercise or a digital platform, he said that communications to members must be careful not to push members one way or the other.

“It has got to be even-handed, and I think we can’t ignore the impact of freedom and choice, particularly at a time when pensions are getting such a bad press in both Whitehall and Westminster,” he said, adding that members could be tempted to transfer away from pensions by this negative perception.

Humans still have a role

However, he remained sceptical about the use of digital platforms: “The real danger here with realtime presentation is that you focus on price rather than appropriateness.”

Advisers are likely to welcome any innovation that improves efficiency and speed in dealing with member requests, said Jonathan Watts-Lay, director at education and advice firm Wealth at Work.

But he agreed that technology is unlikely to replace human interaction in the guidance process.

“The problem is, invariably that individual says, ‘Well I want to talk to someone’,” he said. “They will have misunderstood stuff, they will have got it wrong.”