Getting people to understand what their financial situation at retirement will be is more important now than ever before. The 2015 pension freedoms gave people more control over their pension savings but also meant they have to make more decisions that will impact the rest of their lives. To make the right decisions, employees need to digest a lot of information about their pensions.
However, the traditional annual pensions statements used to communicate information about retirement savings can be difficult to understand. And if you can’t relate to something, it’s easy to put it to one side ‘for later’ and never get to grips with it.
In recent years, pension providers have been exploring ways of making pension statements more accessible. Some have created personalised video statements to get pension information across in a more engaging format.
Our graphic shows a pretty even split between providers – 10 offer personalised video statements, while 11 do not. Of those that do, the majority do so at no extra cost. The only exceptions are two Aviva offerings – Aviva My Money and Aviva My Money (Master Trust). However, Aviva does provide plenty of flexibility in how the video pension statements are paid for.
Of the 10 propositions that offer personalised video statements, six read out an individual’s personal details, such as contribution amounts, fund value and retirement age. Of those six, four use some numeric values but the two Legal and General offerings go one step further in reading out all numeric values. An interesting fact is that these two propositions are also the only ones to use Voicebot/API technology to read the audio. All the others use pre-recorded numbers and values.
None of the 10 propositions that offer personalised video statements has built the service in-house using their own technology. This is not surprising given how expensive and time-consuming it would be.
Using specialist suppliers makes more sense and the vast majority of pension providers – eight out of 10 – use the video platform Idomoo. Standard Life is slightly different in using a combination of Idomoo and BT Enterprice, while the two Legal and General propositions use VideoSmart.
All of the 10 propositions with personalised video statements are interactive – in other words, they will ask the user to carry out specific actions or click through for further information. However, this does not mean that they all use interactive questions to learn more about members’ needs. Only four propositions – the two Aegon offerings and two Mercer Master Trusts – do this and they all provide immediate feedback on how members can improve their financial situation.
Looking at the type of information contained in the video statements, all 10 propositions that offer these include the current fund value, but there are variations in relation to other features that they include.
Eight include the projected pension fund value at the selected retirement age but the two Mercer Master Trust propositions do not. Six propositions include the total member contributions and the total employer contributions for the current year.
However, fewer offerings include the total tax relief received for the current year – the two Aegon and two Mercer Master Trust propositions do, while the remaining six do not. This may be explained by providers wanting to maximise the impact of their videos by keeping them short and simple.
Having said that, Aegon’s propositions include some information that many providers do not. It is the only provider to include the current fund choice. It also includes the comparative income this will provide relative to current salary – the only other provider offering this is Standard Life. Along with Legal & General, Aegon also includes suggested additional contributions to meet required income levels.
However, Aegon doesn’t include the impact of the suggested contributions in its video pensions statements. Legal & General, Standard Life and the two Mercer Master Trust propositions all do this. Information about the state pension is something that is included in most propositions, but the two Standard Life offerings do not provide this.
For some members, a video statement will drive home the need to pay more into their pension. Most providers reported up to 20 per cent of members increased their contribution levels after watching the video statement. For the majority of propositions, between 11 and 20 per cent of members increased their contributions. For the others, it was up to 10 per cent.
The increase was mainly made to employer and employee contributions, with Aviva My Money the only proposition to report an increase solely in employer contributions.