M&S portal launch sees 12,000 DB members sign up

In an update for members released in late 2018, the company stated that more than 12,000 members have successfully registered so far and have been using the portal for functions such as updating their address, changing their bank details and viewing payslips.  

Online remains the quickest, cheapest and easiest way to communicate with members. It offers the best long-term option to reduce costs on a sustainable basis

Daniel Taylor, Trafalgar House

Once registered, members will be able to update their personal details at any time and access monthly payslips whenever their pension is paid.

Plans to launch the portal were announced over the summer, as part of M&S’ intention to continue improving pensions administration service for its employees and introduce new systems and tools.

DB schemes slow to embrace tech

According to Daniel Taylor, client director at Trafalgar House, a specialist third-party pensions administrator, many defined benefit schemes have been slow to implement new technologies for their members, believing that the relatively static nature of benefits and lack of member demand means they can forgo this setup cost.

Taylor noted, “However, online remains the quickest, cheapest and easiest way to communicate with members. It offers the best long-term option to reduce costs on a sustainable basis. It also provides members with ‘any time, any place’ access to their records and, if implemented well, can improve data quality and information flows.”

“Online options often require an initial investment to configure and implement. A return on investment may therefore only be achieved after two or three years,” he said.

Taylor also said that communicating the new portal and the options it provides will be essential for any scheme looking to follow suit.

“Any trustees who think that ‘if you build it, they will come’ will be sorely disappointed with take-up rates,” he said.

Other organisations that have seen a successful take-up of their online portal for self-service include the Nationwide pension fund, which saw almost a third of the scheme’s 30,000 members sign up to the service.

Capita Employee Solutions is helping M&S improve communications about the scheme, both online and in the post.

Comms enable liability management

Key findings from the PwC pension technology survey published in 2018 state that 82 per cent of employers see communication as a key area for investment.

The PwC survey estimates that while many tools will be member-facing, technology can also drive value for scheme sponsors and trustees, offering benefits such as greater cost-efficiency, access to derisking analysis, enhanced cyber security and improved standards of governance.

Nick Throp, head of Like Minds, a communication consultancy, said: “Until relatively recently the DB world was dominated by deficits, funding plans and change projects. In this environment there wasn’t much appetite for engaging members with their DB pension beyond a summary funding statement and a trustee newsletter. The DB website was primarily a repository of information – booklets and the like.”

This is changing for a couple of reasons, he noted. Freedom and choice have changed DB pensions as well as defined contribution. Now there is a need for DB members to understand their options too.

“DB schemes are also developing long-term strategies for reducing their liabilities such as pension increase exchanges, member options and buy-ins and buyouts. Trustees and employer sponsors are looking at long-term engagement strategies to help members through these exercises in a way that feels coherent,” said Throp.

Members’ communication preferences are changing too. Digital content and video in particular are increasingly helpful in a world where people do not have the will to wade through a 50-page retirement pack.

“We believe that DB websites need to become more user-centric, engaging and helpful to DB members over a longer period of time,” said Throp.

M&S closed the DB scheme to new members in 2002. The scheme had 60,454 deferred members and 51,784 pensioner members in 2018. The value of the scheme’s assets at March 31 2018 was £10.5bn.

Chris Tagg, board director at the Pensions Administration Standards Association, said offering a portal “is becoming increasingly more common for defined benefit schemes; third-party administration firms are including more access… as part of their fixed fee”.

Typically portals will allow members to see their records and the data the pension scheme holds about them, including benefit history, salary details and bank account details.

“Then depending on the quality of the scheme’s data and the complexity of the benefits the additional functionality they get is that members might be able to run some calculations online,” said Tagg.

He said the industry is pushing for members to use online services. This is helpful for data cleansing because scheme members can correct mistakes themselves.

“The better the data then the better the administration is going to be,” said Tagg, adding that data quality would be crucial for compliance with the pensions dashboard.

Many schemes have poor quality data. Julia Turney, head of platform and engagement at Barnett Waddingham, an independent UK consultancy, said: “The true benefit of engagement portals comes in its ability to deliver targeted messages to that individual, making sure key takeaways aren’t lost in reams of other messages.”

Messages could be targeted at different age groups, as these give an indication “to what their key objectives and focuses will be”, said Turney.

Maintaining high-quality data is the cornerstone of being able to deliver good targeted messages. Members could be encouraged to update information themselves using “single sign on” links to the member’s online account with the administrator, added Turney.

Bringing pensions into the modern age

Pensions need to catch up with open banking so members can see all their finances in one place, Turney said. “The pensions dashboard is coming but not quick enough and it would still require administrators, especially those old DB schemes, to update their systems and even be required by legislation to provide data.”

Lesley Carline, president of the Pensions Management Institute, said the advancement of online capabilities in pensions has been too slow in the past, partly due to the cautiousness of trustees in providing it to their members, but this attitude has changed in recent years.  

Carline noted that the complexity of DB schemes has hampered online delivery, along with the cost of automating calculations. The significant increase in demand for transfer quotations and its subsequent drain on resources has many providers and schemes looking to put estimates online and point members towards the web rather than helplines, she said.

“But looking at a more holistic approach to online retirement savings, where the nirvana is the member being able to see all their pensions, savings and investments in one place to be able to make decisions, this is still a long way off,” said Carline. She added that members must be taught how to use the new tools they are given.

Pensions can learn a lot from the opening banking initiative, and the development of the pensions dashboard cannot come soon enough, added Carline. “Its delay due to dithering at the DWP has been frustrating for our industry who want to get on and do it,” Carline said.