Insights
Are Defined Benefit (DB) Pensions finally ready for the digital age?
Imagine a world where pension administration is as seamless and efficient as your favourite e-commerce platform. A world where data is accurate, real-time, and accessible with just a few clicks. Where members can effortlessly manage their pension accounts, track progress, and make informed decisions from the palm of their hand.
For too long, the Defined Benefit (DB) pension industry has lagged behind the digital transformation and often remains mired in archaic processes, siloed data, and manual practices.
However, the time has come for DB pensions to embrace the digital age, either adapt or be left behind. The journey is not without its challenges, and it will require a fundamental shift in technology, processes, and skillsets.
In our latest blog, Mantle’s Graeme Riddoch gives his thoughts on “Are DB pensions finally ready for the digital age?”
Digital is here
I’ll get my cards straight on the table. My contention is that members are, but less so the schemes they belong to.
I just bought a last-minute present using my Amazon app. It took seconds and guaranteed delivery by the next day, the confirmation email followed seconds later.
Love it or loathe it, Amazon is probably the clearest expression of the modern digital consumer experience.
Buying a book on Amazon could be seen as trivial compared to getting your money out of your DB scheme. Having said that, retirement is a critical touch point, so why not make it as easy as possible?
Clearly, it’s a whole lot more complicated than an Amazon purchase. Delivering a package to the wrong address is a lot less serious than paying someone’s lump sum to the wrong bank account!
Having said that, some schemes have successfully moved the retirement process online.
Gone are twelve-page retirement packs, where most of the content, isn’t relevant to the average person. Online, members just get served up the questions and content that’s relevant to them. Many will just be a few clicks away from their benefits. Add in online ID verification and it transforms the whole process for member and administrator alike.
Where are the barriers?
If it’s possible to deliver something akin to a modern digital experience, then why aren’t more schemes doing just that?
Well in my experience it’s a function of some, or all of the following:
Poor quality data
This is a fundamental. If you have a modern platform capable of automating all benefit calculations it needs good data.
The administration platform isn’t capable.
That’s the case as lots of systems have their roots in the last century. Bolting on upgrades is like applying sticking plasters.
“Going digital” is seen as a cost not a benefit
Many trustees with an eye on costs don’t see the payback in spending to upgrade.
Technology blind
Especially with smaller schemes, there seems to be a reluctance towards adopting new technology.
I recently debated with a trustee whether his members would use a QR code to view an animation. I had to remind him that if they had wanted to function through Covid and lockdown they would have got the hang of it by now. He remained unconvinced.
A pensions manager of a large DB scheme with an unusually young membership maintained his members wouldn’t use a phone app. “Do they use banking apps?” “Yes, but they wouldn’t for pensions……”
Members are people. At the heart of this disconnect is the view that members are almost like a different species, an accidental by-product of running a DB scheme rather than being people like you and me.
If we could drop the term ‘members,’ it might help to reframe how we treat the end consumer of our product, the customer.
The technology already exists to transform the experience for members, administrators and trustees, now we just need to put our minds to making it happen.
How Mantle Services can help
Despite the challenges, the time is ripe for defined benefit pension schemes to embrace digital transformation. The digital age has arrived, and defined benefit pensions must adapt to stay relevant and meet the evolving expectations of their customers. The key to unlocking this digital future lies in a commitment to innovation, data integrity, and a customer-centric approach that treats members as valued consumers, not merely an afterthought. The technology is available; it’s time for the defined benefit pension industry to seize the opportunity and thrive in the digital era.
If you’d like further information on how Mantle Services can help your organisation deliver effective outcomes for pension schemes and administrators, get in touch with us today. Email enquiries@mantleservices.com or contact us. You can also view our range of solutions here.
