In this insight we look at what retirement planning tools are provided by workplace pension providers, what they can illustrate and who has access to them and how they were built.
Almost half of pension savers (41%) fear they will not have sufficient savings to fund their retirement (Schroders Global Investor Study 2020) as rising life expectancy rates mean they are funding a far longer retirement than previous generations.
Retirement planning tools can help members see a how much they could have at retirement and help advisers demonstrate to their clients how much even a small increase in contributions can make to their retirement planning.
Our data shows that all 18 workplace pension providers included in our analysis offer a retirement/pension planning tool. However, some workplace pension providers’ retirement planning tools are designed solely for the use of the member and others for the adviser. Our data shows that over half (56%) of tools allow access for both the member and the adviser, with the remainder only allowing the member access. Scottish Widows are the only provider who allows the adviser to restrict/turn off access to their retirement planning tools to its members if wanted.
Should the client be the one using the tool, a third of provider tools allow the client to make an enquiry which will then be sent back to the adviser. The providers who facilitate this are Aviva Designer, Aviva My Money, Aviva My Money Master Trust, Standard Life, Standard Life DC Master Trust, and True Potential.
All provider tools can take regular contributions into consideration. However, Fidelity, Fidelity Master Trust and Hargreaves Lansdown’s retirement planning tools are unable to take single one-off contributions into account and Fidelity, Fidelity Master Trust and Aviva Designer do not take matched employer contributions into consideration.
All tools show the accumulated fund value and level of benefit at retirement. Cost of delay is showed by 72% of providers (Legal & General, Legal & General Master Trust, Scottish Widows, Standard Life and Standard Life DC Master Trust tools do not). The majority of tools will display any shortfall calculations, only Royal London and Salvus do not. Tax benefits are less widely displayed with only 67% of provider tools displaying them (Aviva Designer, Fidelity, Fidelity Master Trust, Scottish Widows, Scottish Widows GSIPP, and Scottish Widows Master Trust do not).
When it comes to illustrating the effect of how you chose to take a pension to workplace pension, some tools show more options than others. Most provider tools will show the effect of taking your pension as cash, only Royal London and True Potential do not.
Other than Aegon Workplace ARC and True Potential’s tools, all will show the effect to taking your pension as an annuity. However, only just over half (56%) of workplace pension providers’ retirement planning tools show the effect of taking a joint annuity.
Taking a pension as income drawdown is the most commonly illustrated by the tools with only Royal London’s tool not displaying the effect of this choice.
When it comes to helping explain the various options how to take a workplace pension, two thirds of providers link to online content around these options. The providers who do not offer this are Legal & General, Legal & General Master Trust, Royal London and Salvus.
By the time a workplace pension provider is approaching their chosen retirement date, they will often have multiple sources of income. Workplace pension provider retirement planning tools take some but not all of these into consideration.
State pension benefits are perhaps the most widely expected sources of additional retirement income for workplace pension members. Our data shows that other than Salvus and Scottish Widows (GPP), all workplace pension provider’s retirement planning tools can take state benefits into account.
When it come to ease of use, one of the key aspects is pre-population. When it comes to retirement planning there are a lot of moving parts so it can save a lot of time if some, or all, of that information is pre-populated into the tool.
Our data shows that only Aegon Workplace ARC, Hargreaves Lansdown, and Salvus cannot pre-populate their retirement planning tool with client specific information. Most that can are able to do this with data held in the scheme. True Potential can pre-populate their retirement planning tool with both scheme and Client Management System data.
Client’s existing unit holdings and/or fund value can be pre-populated into 72% of provider’s retirement planning tools. Those who cannot are Aegon Workplace ARC, Fidelity, Fidelity Master Trust, Hargreaves Lansdown and Salvus.
Two thirds of workplace pension provider’s retirement planning tools can take plan specific charges and terms. The providers whose tools cannot are Aegon Workplace ARC, Fidelity, Fidelity Master Trust, Hargreaves Lansdown, Legal & General, and Legal & General Master Trust.
Retirement planning is a long process that may be revisited by the adviser and the client multiple times. The majority of tools (83%) will produce output documentation at the end of the process. Our data shows that 61% of providers allow output and data to be stored within the system for later retrieval.
When it comes to how the tools were put together, our data shows that two-thirds of providers build their own tool in house. Those who chose to use a third party used Evalue (Aegon Master Trust), DT (Aegon Workplace ARC), CTC Software (Legal & General and Legal & General Master Trust), and Realise (Standard Life and Standard Life DC Master Trust.)
Overall, our data shows that workplace pension provider’s retirement planning tools can cover a fairly broad range of benefits and projections. Aviva My Money and Aviva My Money Master Trust have the tools that take the most income sources into account, show the effects of changes, whilst also showing the widest set of options when it comes taking a pension.