How future technology could improve our pension management

We all know how important it is to save for our old age, which is why most of us now have a pension in one form or another. However, keeping on top of where your pension is and how it is being invested can sometimes seem like an uphill struggle.

Thankfully, modern technology is making this a much easier process, and so here, Curtis Hambly, Managing Director at Hamblys IFA, shares what the future may hold for the way we manage our pensions.

Do you know what is in your pension pot at this exact moment? The latest figures suggest that as many as 66% of us do not know the total value of our pensions. This can be because managing these investments can seem like a complicated process, with many simply choosing to combine pension pots as they move between jobs simply because it seems like the easiest option and not necessarily what will earn us the most money.

We now live in a world that has an increasing emphasis on digital, so it is no surprise that our pensions are headed this way too. There is still a lot of work to do on this front to make pension management even easier and more transparent but developing technologies are now putting this at our fingertips, thanks to the pensions dashboard initiative which is set to require pension providers to feed data into a centralised hub, providing a single view of all your pensions. This will make it easier than ever before to see what you have and what it is doing for you. So, what other technologies can your pension benefit from?

Getting on the cloud

Cloud technology is being used across more and more industries, so it is no surprise that it has become the foundation of pension management too. Approximately half of Local Government Pensions Funds still rely on on-premises administration systems, but more are now moving towards cloud-based solutions. This ability to hold huge amounts of data makes it much easier to make pension funds accessible as it provides more flexible options. It can be accessed from any device and at any time, making management simpler for the pension holders and the organisations involved.

Shareholder resolutions

Pension savers are now being given a say on several issues, such as climate change, through a new pilot scheme allowing members to see all of the companies in their investment portfolios and giving them the opportunity to cast notes on some of the more difficult issues. Savers are notified of new votes on subjects which are then considered when shareholders form their own voting strategies. This can help to massively increase engagement in shareholder votes and gives pension savers a greater understanding of what they are investing in.

Automation

By harnessing technology to automate many processes and workflows risk control is maximised, as the chance for human error is reduced. This gives the pension holder the opportunity to only refer their case to an expert when they feel the need to and opens the door for artificial intelligence to enhance the member experience even further as the technology continues to develop.

Drawdown investments

Typically, if you wanted to drawdown income from your pension, you would be required to specify a fixed amount to be paid into your account each month. However, changes in technology now gives you the flexibility to fix a level to which your bank account can be topped up each month. That means that if you spend less one month, you drawdown less, making it a more tax efficient solution for the money that you are not using.

Analytics

With so much information now readily available, we are used to being able to analyse all kinds of investments, and our pensions are no exception. The advanced analytics solutions which are now in use can help customers to understand the vast amounts of available data and spot where their pensions could be doing better. This gives them the chance to modify this and solve the problems or monitor performance over a longer period if they choose to.

Stranded pots

When we leave a job and move on to a new one, we leave behind what is known as “stranded” pots. Transferring these pots has seemed to be one huge headache in the past, which is why so many get left and forgotten about. When you consider that the average UK worker can have as many as 11 different jobs in their lifetime, that is a lot of unmanaged and unloved pensions being left to fester.

There are now moves from banking groups and pension companies to make this a thing of the past. With pre-authentication of banking facilities, you will only need to provide the name of your employer, an approximate value of your pension, the name of the scheme and your date of birth in order to transfer a pension into a new pot. This can take a matter of minutes and makes it much easier for you to keep track of exactly what you have and therefore be more efficient in working out what it is doing for you.

Virtual reality

Virtual reality might seem like something from sci-fi movies, but it could soon be part of your pension management. There are now plans to use these VR headsets to help people see how they could enjoy their retirement based on the amount they save. This gives a visualisation of whether you will be spending it in Brighton or Barbados according to whether you have minimum, moderate or comfortable savings plans as well as exploring some of your investments in glorious 3D.

Digital technology has a great many benefits, and in the pension world, it is a fantastic way to increase engagement between customers and their pensions. By keeping on top of what your pension pot is doing, you have a much better chance to make your money work harder for you, and to have a greater amount to enjoy once you reach retirement.