Make pensions more 'fun' with apps and gamification, suggests minister
Pension providers should inject more "fun" into their offerings to encourage people to increase their retirement savings contributions, the pensions minister has told MPs.
Baroness Altmann was asked by the Commons Work and Pensions Committee how people can be encouraged to increase their workplace pension contributions, to ensure they have enough cash for a comfortable retirement.
She suggested that further use of apps and gamification are among the ways people could become more engaged with their pension pot.
Baroness Altmann also said a new law is needed to give workers' pots further protection and added that plans for a "pensions dashboard" - where people would be able to see all of their pots in one place - still have some way to go.
A recent review for the Labour Party recommended that people should be putting 15% of their lifetime earnings towards their retirement.
Under automatic enrolment into workplace pension schemes, the minimum contribution as a percentage of earnings is currently set at 2%, including contributions from workers, employers and tax relief - but experts warn that just saving the bare minimum will not give people a comfortable retirement.
Minimum contribution levels are being gradually increased, to 8% in 2019, by which time it is hoped many people will be firmly in the savings habit and so will not drop out.
Baroness Altmann said that simply increasing minimum contributions is "not the whole solution".
She told the committee: "W hat's happened too frequently in the past is that pension providers have relied on somebody else, whether it's an employer, the government or a financial adviser bringing them the customers' money - and they don't engage enough with the end customer.
"Auto-enrolment is their chance now to engage with the end customer and make the customer feel that they've had a good experience - good service, good products and want to do more.
"Just like any other industry - if you go and shop somewhere and your customer's had a good experience, they'll come back to your shop. If they feel they've been roughly treated, or unfairly treated, they'll say: 'No thank you.'
"So we need to get to 2019 at the full rate with the majority of people who are in pension saving thinking: 'My provider's done a good job for me. When I can I want to do more.'
"Because if we just say the next area of auto-enrolment is we're going to move gradually up to 15%, say ... however much the government was to increase the auto-enrolment minimum from the current level, if people are not happy they'll just opt out."
She continued: "We have to help the pension providers, and many of them are, step up to the plate and engage customers in ways they haven't done before.
"Make it a bit of fun, apps, gamification, they are starting to do that, products and services that these customers, who are coming in, and staying in at the moment, the opt-out rates are 10% or so, feel: 'This is a good thing for me, I'm happy to be here and I want to do more when I can.'"
There have been calls for the Government to press ahead with plans for a "pensions dashboard".
But Baroness Altmann said: "We are so far away from being able to do that. You don't even have pension providers providing their customers with a standard statement of what pension they've got.
"Even if you know where your pension is and you phone up or write to your company and say: 'Can you tell me what my benefits are under the scheme I've got with you?' each company will send you its own version of the information."
Baroness Altmann said work is being done to come up with a standard form where anyone can be given information on their pension in one place.
She also discussed the need to make sure the money being put into pension schemes is secure. Thousands of smaller employers are currently coming on board with auto-enrolment, many of whom have little previous experience of pension schemes. Particular concerns have been raised around master trust schemes which manage pensions.
Baroness Altmann said legislation is needed, adding: "In most cases, the assets may be protected. But we want to make sure that if any of these trusts wind up, the costs of wind-up don't fall on the members' assets."
Andrew Warwick-Thompson, executive director for regulatory policy at the Pensions Regulator, recently said there is a risk that some pension schemes may "fall over in the future".
He said previously: "We urge all small employers preparing for automatic enrolment to choose a high-quality large scheme such as a well-run master trust or a group personal pension plan."
Former pensions minister Steve Webb, who is now director of policy at Royal London, called for a timetable to be given for the introduction of a pensions dashboard.
He said: " With millions of fragmented small pots being built up under automatic enrolment, there is a growing need for a single place where people can see all of their pensions, including their state pension, in one place.
"Whilst government does not need to deliver the pensions dashboard, it does need to make it happen. We now need regulators and government to give us a timetable which will turn good intentions into effective action."