Pension funds are increasingly keen to have a slick online presence, wanting to get members to register for their portal or even go entirely paperless. What are the possible obstacles, and has the pandemic changed things? 

 

The M&S Pension Scheme said that as of August this year, more than 36,000 of its members had signed up to receive digital communications. At the BT Pension Scheme, which recently relaunched its website, 78,000 of roughly 275,000 members have registered to manage their pension digitally.  

 

Defined contribution schemes are not inactive either. The Babcock Retirement Savings Scheme trustees have been working to introduce new functions for members. The new website was due to launch in October 2021, requiring members to re-register. In August 2020, the scheme had sent reminders of how to sign up for those not yet registered on the scheme portal, leading to 4,000 members registering. 

 

 
DC members have a lot of responsibility for their pension savings, making an online portal – where they can select or change investments, chosen retirement date and more – a logical step, but the case is not always clear-cut for defined benefit schemes. But even there, online portals can provide cost savings for administrators – and sometimes schemes – by letting the member do some of the simpler tasks themselves, such as updating their address. If members go online only, there are also savings on paper and postage. 

 

Pandemic lockdowns have also changed the habits of consumers and savers and focused the minds of administrators and trustees on providing digital access. Gary Evans, head of third-party administration at Hymans Robertson, said: “There’s a focus on updating pension portals now at least partly driven by demand from members during lockdown and the realisation that greater online access could have made lockdown much easier to manage for pension schemes.” 

 

In turn, members are expecting the companies they deal with to have a good online portal and will be likely to use those. Evans said there is evidence to suggest that lockdown has made pension scheme members of all ages more likely to use online portals.  

 

“However, we’re starting from a low base as an industry – registration levels have generally been low across many schemes - lower than 10% - with visits infrequent,” he said. "And there’s a key lesson there for portals: they need to be intuitive and easy to use - and older sites are generally neither - to attract members to visit.” 

 

 

Where schemes introduce online portals, ongoing engagement and promotion of the portal is important, said Paul Latimer, who heads up pension administration at Barnett Waddingham. “If you send one letter you’ll probably end up with a 10% take-up,” he said. 

 

The largest take-up of 50% he observed where a trustee chair “has gone round to shop floors and said, ‘We really recommend you do this’”, as well as the scheme offering demos. 

 

Overall, the take-up rate has therefore been mixed across client schemes, he observed, as much depends on how the trustees promote online portals. “I've always said to trustees if they go out and promote online services they will have far better take-up,” he said. Websites are often launched and then the issue is considered ‘done’ and not chased up, he noted. Instead, constant improvements to the website should be made. “You’ve got to offer them things they can do there,” he observed, such as modellers, giving a holistic view of finances. 

 

Some schemes are going even further. “You start seeing a number of schemes going... paperless,” said Latimer, forcing members to register for their portal if they do not want to lose access. This “will become the default, schemes will want to go paperless”, he predicted. 

 

Increasingly, some of the larger in-house sites run by third-party administrators are bringing in functions where members can retire themselves, working through the entire process from ID verification to retirement options, although Latimer said security concerns mean it does require a significant amount of testing. Allowing transfer values or retirement incomes to be displayed online also means the data quality has to be high, he warned. 

 

 

With DB members now mostly consisting of pensioners, many of these functions will be mainly introduced for generation DC – but could the notion of older people being luddite actually be a myth? 

 

"We see a lot of evidence of older people being very happy to use online tools. There are always going to be some who can’t, but there is a lot of engagement from older generations,” said Latimer. As older people tend to have more time on their hands, they can sit down and look at these things, he said. “Some of the feedback we get back from them is, ‘Can we have this, can you change that’, because they have time to do it,” he noted. 

 

Pointing to the age of members might in some cases be an excuse for providers not to offer a portal, he suggested, but “as much as we want 100% take-up there will always be people who can’t do it – there is always going to be a need for something manual”.