How technology is shaking up the UK pensions market

The UK pensions market, worth £13.9billion, is facing unprecedented challenges and opportunities as technology-driven innovation transforms the way people save, invest, and retire. While the current system has served many people well, it also suffers from complexity, inefficiency, and uneven outcomes. As the population ages, and financial pressures mount, the need for more accessible, affordable, and personalised pension solutions is on the rise. In this context, technology is playing a disruptive role by introducing new products, services, and platforms that empower consumers and providers alike.

Pensions with flexibility and personalisation

One way technology is already disrupting the UK pensions market is by offering flexible and personalised retirement savings and income solutions. Our direct-to-consumer Self Invested Personal Pension (SIPP) is a prime example of a solution to consumers who are happy to make their own decisions. This reflects the choice consumers want due to their diversity of lifestyles, careers, and financial circumstances. Digital platforms such as pension dashboards, individual pension provider portals and retirement planning tools are enabling retirees to manage their savings more dynamically and holistically. These include, for example, funds available at retirement, choosing how much to save or withdraw each year, investing with flexibility and choice, or accessing new sources of income such as part-time work.

Spreading pension knowledge

The second way in which technology is advancing the UK pensions market is by promoting greater engagement and education among savers and investors. Still many people lack sufficient knowledge or interest in pensions, which leads to poor decision-making or inadequate savings. Evidence from the Financial Conduct Authority’s Financial Lives 2020 survey found that 58% of those aged 45+ who were yet to retire have put little or no thought into how they will manage financially in retirement. Furthermore 37% of those aged 45+ with a Defined Contribution pension in accumulation did not understand the different options they can choose from when taking money from their pension. However, online pension calculators, pension information portals such as the UK government websites, pension provider portals (such as https://isipp.co.uk/pension-knowledge) and even online courses are helping raise awareness, motivation, and literacy about pensions. With relevant and up to date knowledge, individuals will be empowered to take more control over their retirement planning, and contribute to a more vibrant and sustainable pensions ecosystem.

More transparency

Another way technology is trying to help the UK pensions market is by enabling greater transparency and competition. More needs to be done to increase transparency and trust amongst consumers. Poor service, non-competitive and hidden fees or lack of investment choices can discourage people from saving or investing, or make them switch to other providers that may not be better. However, digitisation of services is trying to solve these problems. Digital portals are aiming to improve service quality, provide information to savers at a click of a button and foster innovation among pension providers that want to attract and retain customers.

Of course, technology-driven disruption also poses risks and challenges that need to be addressed. These include, for example, data privacy, cybersecurity, regulatory compliance, and ethical concerns. Moreover, technology cannot replace human judgment and empathy entirely, especially when it comes to sensitive and complex issues such as retirement planning. However, if harnessed wisely and collaboratively, technology will indeed help transform the UK pensions market into a more customer-centric, efficient, and resilient system that benefits everyone.

In conclusion, the UK pensions market is ripe for disruption, and technology is a powerful force. By promoting transparency, flexibility and engagement, digital tools and platforms are enhancing the value and accessibility of pensions for millions of people.

Disclaimer 

The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

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