For those tasked with managing a company’s pension a key objective is that staff fully understand the scope and potential of their individual pension plans.
According to Pauline Killeen, senior manager client services with Irish Life and a director of the Retirement Planning Council: "by law, company pension trustees must send an annual benefit statement to their members. But an awful lot of what's in those statements relates to compliance, rather than helping people focus on what is important – their target income for retirement and whether they are on target or not. The result is that very many people don't read them,"
However, helping people understand their company pensions is what really matters. “For most people retiring, their family home and their pension are the two biggest financial assets they have, so it’s incredibly important,” she says.
While the Pensions Authority has a range of codes of governance covering pension schemes, when it comes to communicating the really important messages, Irish Life goes further.
“We believe people should have access to everything there is to know about their company pension, from how much is in it to what contributions they are making, to how much is coming out in costs.”
While it’s a subject that can appear complex, it should be very simple. “There are two key questions which people need to ask themselves: 1. are they paying enough into their pension savings, and 2. are they investing it wisely. If you are looking after your company’s pension plan, these two areas are so important to help your staff understand.”
“We want to help people answer these questions. So we go above and beyond the legal communication standard of issuing people with an annual benefit statement,” says Killeen.
“First, look at how people can gauge whether they are paying enough into their pension savings. Irish Life’s online service, Pensions Planet Interactive, ensures people in its defined contribution company pension plans, as well as employers and brokers, can answer these questions with ease.”
Irish Life also provides a smartphone app that allows people to check their funding status instantly, whenever it suits them, in pictorial form, so that people have a visual sense of whether they are on track. “There is a big correlation between people that engage with the app and people that realise they need to pay more money into their pension savings,” she says.
“What we find is that those who log on to the website to check this information tend to do so, on average, four times a year. Those who check via the smartphone app tend to do so weekly. We’re seeing people on the bus or waiting for their train in the habit of checking out their pension.”
It’s about making pensions more accessible, and more engaging, through technology, she says. “Not all companies invest the way we have. We commit millions each year to developing our technology,” says Killeen.
But Irish Life also wants to help people who might not be as tech savvy. “We reinvented our annual statement document to ensure that in the first few pages, people see the information that relates to them, how much is in their fund and whether they are on track for a reasonable pension.” Four months later people receive an additional one page document, Pension Pulse, again highlights whether they are on track and informing them of the risk level of the fund their money is currently in.
Another feature of Irish Life Empower, that Killeen outlines, is the unique Personal Lifestyle strategy that enables it to tailor investment services to individual members.
“Six years from your expected retirement date, we calculate on an individual basis exactly how much tax free cash the Revenue will allow you to have, and then, with the rest of your fund, what you are most likely to do – whether it’s buying and annuity or leaving the money invested in an ARF (approved retirement fund). It’s very sophisticated and unique to us,” says Killeen.
So if good governance is a combination of helping people understand their target for retirement and how they are invested, what else does Irish Life do to support people looking after their company’s pension plan?
“Irish Life Empower offers lots of governance support to employers, from trustee training, to governance planning sessions and governance reports. At the end of the day you can have all the good governance and great tools you want, but if people end up with a paltry pension, that’s not a good outcome”, Pauline says.
“It’s for this reason that our reports also cover adequacy. We tell pension trustees whether we think their members are going to have enough when they retire. It comes down to helping your staff understand those two key questions, are you paying enough in and are you investing it wisely. Our aim is to empower people so that they can enjoy the best possible outcome at retirement”.
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