News UK partners with Scottish Widows on pension app testing

Defence contractor Qinetiq also participated in a workshop of more than 30 Scottish Widows clients aimed at ensuring that the app, which aims to improve broad financial wellbeing rather than pensions adequacy, corresponds to members’ needs.

Life and pensions company Scottish Widows is far from the first provider to explore app-based engagement strategies, and research casts doubt over whether the cost of efforts to date has been worthwhile.

Pension engagement in the UK has seen only small, incremental improvements in the past five years, according to a Mercer survey of 80 organisations representing one million members.

Our employee audience is much more digitally aware and they demand the same sort of access as our customers are demanding from us

Paul Bird, News UK

Experts now say success in engagement depends on pensions being able to integrate with more frequently used services, allowing savers to gain a holistic picture of their wealth without competing for screen time.

Providers embrace digital

Scottish Widows expects to launch its app in July, which will feature functions including instant messenger-style communication between members and a bot, preferred by 80 per cent of test participants. Savers will also be able to check basic details of their current arrangements, after a survey revealed 70 per cent of respondents did not know how much they are saving and whether it was enough.

The launch follows similar moves by competitors Aegon and Royal London, and Aviva, which makes use of facial and fingerprint recognition to secure its service.

However, the main challenge for insurers and other providers is not competition from peers, but getting savers to use the features.

Lloyds Bank, parent company of Scottish Widows, had a massive 4bn logins to its digital banking services last year, and at the end of 2019 Scottish Widows customers viewed their pensions online 106m times. Encouragingly, the provider reveals that consumers have clicked through to the workplace pension tile in 7 per cent of these interactions.

Robert Cochran, senior corporate pensions specialist at Scottish Widows, says corporate clients are also demanding this level of integration: “The biggest message from employers was the importance of having everything in one place. Employers are not just running a pension scheme. They have a whole host of other benefits, and they recognise that people won’t spend their whole life with them. To make good decisions they have to think about their finances in the round.”

Over-hyped?

However, some consultants cast doubt on whether the offering of a separate app for members achieves the level of integration demanded by consumers.

David Millar, LCP principal and head of communications, notes: “Penetration of apps into the workplace, for the purpose of allowing people to engage with pensions, is not widespread.”

“Even where they exist, we still haven’t solved the challenge of how to make these a useful part of people’s lives in the same way that fitness and banking apps have become. As an industry, we need to 'earn our place on the screen', and not be an app that gets deleted in the quest for more storage space,” he continues.

Two things are key: modelling and online functionality. Paul Waters, head of strategic digital solutions at Hymans Robertson, stresses: “They are absolutely critical. Without them it’s like using a car with no accelerator or steering wheel – you might still travel somewhere but who knows where you will end up?”

Clients demand tech

While the jury may be out on the efficacy of standalone apps, client demand for holistic financial education and communications is strong.

Digital offerings are basic necessities for Paul Bird, News UK’s group reward director. The company’s 3,543 employees, of whom 2,973 are members of the Scottish Widows Group Personal Pension Plan, are used to delivering digital services to readers, he says.

“Our employee audience is much more digitally aware and they demand the same sort of access as our customers are demanding from us. It is really important to us that they have a strong digital platform [that is] easy to navigate,” Mr Bird explains.

Communications at News UK, which offers a matching employer contribution of 5 per cent along with legacy rates of up to 12 per cent, is still carried out through a mix of channels.  

A one-page email accompanies annual statements produced by Scottish Widows, telling employees what pages are most relevant to them. It also uses Mercer’s Benpal benefit platform to allow staff to access their pension on their desktop, mobile or home PC, sending out automated texts or email alerts to confirm contributions and plan values.

Face-to-face comms are not neglected with annual presentations, but Mr Bird says digital is an increasingly important part of its communication strategy.

“When we first went to Scottish Widows their digital platform was pretty bland but now it is much better. Two of the popular services are the online retirement service, where employees can access their pension, and… the online transfer service”.

High fees still a problem

The transfer service in particular has come in useful for News UK employees, with Mr Bird finding that many are paying high annual management charges in legacy arrangements set up by former employers.

At News UK, the default option charge is 0.25 per cent, 50 basis points below the charge cap on default defined contribution arrangements.

“It is amazing the number of people who have pensions from previous employers with insurers paying higher AMC… there are still a lot of pensions schemes charging 1 per cent depending on the legacy arrangements” he says. Members are given a list of questions to help them compare value for money, and can carry out a transfer application “which takes literally five minutes”.