Budgeting and goal setting plays an important role in getting out of debt, and also in avoiding it in the first place. Our latest insight looks at what workplace pension providers offer in terms of budgeting and goal setting tools to help members stay in control of their money and save for life’s luxuries.

2020 was a year like no other, having a huge effect on the finances of vast numbers of people. With many facing financial stress, more people have focused on their finances and turned to budgeting and goal setting tools in order to get a firm handle on their finances.

Budgeting and goal setting tools enable their users to create a spending plan for their money, ensuring that they will have enough money for the things they need and are important to them. Budgeting tools can also help users stay out of debt, or help them work their way out of debt if they are already in difficulties.

By setting financial goals, these tools also help their users stay focused and keep their mind on the prize.

With financial wellness of their workforce becoming an increasingly important part of the picture for employers, many are turning to their workplace pension provider for the provision of budgeting and goal setting tools to their workforce.

Our data shows that over half (57%) of workplace pension providers provide an automated budget management tool: Aviva Designer, Aviva My Money, Aviva My Money Master Trust, Legal & General, Legal & General Master Trust, Mercer Master Trust Aviva, Mercer Master Trust Scottish Widows, Scottish Widows, Scottish Widows GSIPP, Scottish Widows Master Trust, Standard Life and True Potential.

However, only Mercer Master Trust Aviva, Mercer Master Trust Scottish Widows and True Potential provide real-time updates. And only True Potential’s tool includes a ‘safe to spend’ budget to the user.

Categorisation can prove useful to users of these tools looking to better understand their personal spending. Our data shows that the tools from Legal & General, Mercer Master Trust and True Potential provide automatic categorisation of personal spending. Other than for the Legal & General tools, the user is allowed to edit, add and remove categories to make it personal to them.

An important aspect of budgeting is setting up spending goals. Our data shows that other than Aegon, Cushon, Fidelity, Hargreaves Lansdown, Legal and General and Royal London all workplace pension providers offer tools which allow the user to set up spending goals, including retirement goal setting:
Real-time updates on progress towards spending and savings goals can help to keep workplace pension members on track to meet their goals. However, our data shows that only the tools from Mercer Master Trust and True Potential provide the user with real-time alerts/updates on their spending goals set within the tool.

The budget management and goal setting tools from Aviva, Legal & General, Scottish Widows, Standard Life and True Potential all offer a budget shortfall calculator to help prevent members from falling into debt by determining how extra funds are required. The tools from Aviva, Mercer Master Trust and True Potential also allow the user to set up a mini budget for short term goals.

Less than half (38%) of workplace pension providers offer a specific savings goal manager tool to help members save for specific purchases. The providers who offer a goal manager are Cushon, Fidelity, Legal & General, Standard Life and True Potential.

The tools from Cushon, Fidelity and True Potential are also able to provide the client with real-time tracking of their savings goals. Cushon, Standard Life and True Potential also provide on-target encouragement or off-target warnings to the user.

The tools from Legal & General and Mercer Master Trust also provide suggestions and insight into users’ spending to assist them in reaching their goals.

Only the tool from True Potential received real-time updates from the client’s budget management tool and enables the user to receive point of sale alerts from the goal manager.

Overall, our data shows that budgeting and goal setting tools, whilst only offered by just over half (57%) of workplace pension providers, are well supported with a wide range of functionality for those providers who do offer tools.

The tools from True Potential are the most comprehensive of those offered in the workplace pensions market, with an impressive range of functionality for both budgeting and goal setting.