When you see the word pension, do your eyes glaze over a little? If so you’re not alone – millions of us just can’t quite find our way to getting round to thinking about saving for our retirement.
The UK government has decided to actively harness this all-too-common inertia, launching a compulsory auto-enrolment pension system for employed workers. Unless they actively opt-out, some of their wages go into a pension fund.
Only around 10% of people have taken the time to opt out meaning that nine million extra workers are now saving for their retirement without having to lift a finger.
But the scheme doesn’t apply to the self-employed. Nearly five million people across Britain now work for themselves, but only 19% of these workers are saving into a personal pension.
That’s a major problem down the line. But at a recent event, some of the leading companies in the sector showed how technology could help address the problem.
In early 2018, almost 100 representatives from the pensions industry, fintech firms, banking and UK government got together with modern businesses such as Hermes and Uber to develop a range of ideas to help the self-employed save for retirement.
Guy Opperman, the UK’s Minister for Pensions told the gathering, “There are 4.8 million self-employed people in this country and it is important that this group are well prepared for retirement. It is vital that we support those who are currently under-saving to begin to build up a private pension.”
Working in teams, the delegates came up with ideas on how tech could help tackle the problem. The winning idea came from contributors Bravura, Tata Consultancy Services, Trezeo and Prudential, who proposed a new app that would use banking information to develop a personalised financial plan.
Using so-called ‘open banking’ – being given access to a person’s account information – the app would work out ways of smoothing out irregularities in self-employed income, while ear-marking funds for both a ‘rainy day’ savings fund and for long-term savings.
Paul Birbeck, Presales Consultant at TCS, who helped develop the app concept explained that the idea was to first show people that they could painlessly save for a ‘rainy day’ before going on to think about pensions.
He said: “From there we could start to save for the future. Once a person has achieved their ‘rainy day’ target any monies coming in would be redirected to a future savings pot with a percentage limit to not always take a lot of money when someone has a good week or month.”
Users would be able to see a simple dashboard on the app showing how their money is split and how their funds are doing.
Another idea that was singled out for praise was an app called SERGE that would plug into platforms such as Uber, Facebook and YouTube to help workers such as Uber drivers put money aside as they complete particular jobs.
Another suggested a new app called Giggle, which would allow someone working for a number of gig economy employers to channel pension contributions through a single platform.
Making it happen
The future is looking promising for the ideas generated at the summit.
The winning teams are now working with the UK government, the Association of British Insurers and industry experts to explore the ideas in further detail. The Department for Work and Pensions remains committed to start proof of concept testing later this year.
The UK government is convinced that the best solution to the problem of self-employed workers’ pensions will come from the private sector.
As John Glen, Economic Secretary to the Treasury said: “That’s why we hosted this event, to bring some of the brightest experts in the industry together under one roof to devise innovative new solutions that could improve the retirement lives of millions of Britons in future.”