How Technology Is Making Pensions More Attractive

The pensions sector has seen vast changes in recent years, with more young people taking their pensions seriously and saving for retirement than ever before.

Research has found that Gen Z (the post-millennial generation born between 1996 and 2015) is more likely to have opened a pension fund than preceding generations at the same age.

Because technology as a whole is widely popular amongst young people, it is not surprising that using financial technology to engage with pensions and finances has become a fundamental part of their lives.

Retirement and Younger Generations

Although Millennials (born between 1977 and 1995) are often proficient at using technology for anything from browsing the internet to online banking, it has become apparent that Gen Z is far more interested in their pension as one of their biggest assets.

According to research, about 77% of Gen Z people stated that they know exactly how much they have saved towards their pension to date. In contrast, only 74% of Millennials knew.

This is likely because Gen Z has only just started on their pension-saving journey, and therefore does not have as much money to monitor. In addition, this generation leads technology-driven lives, often relying on this to manage all areas of their present and future financial situation.

Young people can access pension statements and manage their funds with the touch of a smartphone button, but older generations are less likely to engage with money in this way, instead relying on paper statements that are easily misplaced.

Thankfully, according to the Scottish Widows’ Retirement Report, the number of under 30s saving enough towards retirement has increased by 9%. Employers can lead by example and urge their teams to view pension information online instead of just focusing on online banking.

This will ultimately further increase the number of under 30s engaging with their pension, appreciating benefits such as tax relief and employer contributions, and staying on top of whether they are saving enough to meet retirement goals.

The Role of Financial Technology

It is no secret that technology has revolutionized the way that people live. Financial technology is no exception and is one of the most positive and simple ways to encourage younger generations to engage with their pensions.

New technologies including AI (artificial intelligence), cloud computing, intelligent automation, data analytics, and machine learning have made it easier than ever for people to engage with their pensions in an exciting and modern way.

Although pension management may not be deemed the most interesting topic, the introduction of financial technology has made young people sit up and listen to the importance of having a retirement fund.

By enabling young people to manage their money with ease using platforms they are familiar with, confidence is built and financial management does not seem like such a tedious chore.

How quickly pension providers respond to the Fintech revolution will largely determine how attractive their platform is to savers and as a result, their market share in future years.

Tools for Pension Management

Platforms, dashboards, and digital interactions have made saving for retirement far simpler and more enticing for younger generations.

Advancements in technology have forced changes to the way that pensions are set up, managed, and delivered to savers.

Fintech applications are making investing in pension funds more accessible to younger people, enabling providers to better communicate with consumers who want to optimize their funds.

Pension schemes are keen to adopt more advanced technology to keep up with the competition, introducing elements such as high-quality personalization, integration with other rewards platforms, and advanced analytics to track the activity of pension savers.

The rise of Fintech for pensions is seeing many innovative concepts come to light. These include online pension consolidation tools, pension management dashboards, online advisers, and investment managers.

Moreover, the development of an industry-wide UK pensions dashboard is a highly anticipated advancement due to finish production in 2023. This will allow pension savers access to all of their pension data in one place.

Making it easy for young people who are time-poor to manage their retirement fund is vital to the increase in overall engagement.

Technology enables the importance of pensions to be widely communicated, and campaigns such as Pension Awareness Week encourage young people to educate themselves about what pensions are, what they can do, and why it is important to invest in their retirement as early as possible.

In general, technology enables individuals to take a thorough look at their financial health including their pension, taking an active role in ensuring they have enough money to retire comfortably.

Without Fintech, young people are not likely to engage with their pensions as often, therefore failing to realize issues such as insufficient savings as quickly as they should.

Addressing Worries

It has been identified that the biggest challenge for FinTech platforms when helping pension savers is educating and engaging young people facing an uncertain financial future.

Encouraging younger demographics to be interested in a subject often believed to be boring, complicated, and irrelevant is surely easier when interactive technology is prioritized as a solution.

The current trend of managing money and investments via mobile apps is perhaps so prevalent because young people feel more motivated to think about their savings when they can see them grow.

Young people are inclined to check an app whilst on the go, and not having to physically sort through paperwork and make lengthy phone calls to pension providers will make pension management less daunting.

Another common worry for young people is the industries that their money is invested in. Gen Z in particular is keen to avoid supporting causes they do not morally agree with.

Even though pension worries are thought to affect older generations more, young people are often more concerned about the environment.

According to Make My Money Matter campaign, ensuring your pension is invested in environmentally friendly causes is 21 times more powerful at cutting your carbon footprint than giving up flying, going vegetarian, and switching energy providers combined!

With the rising cost of living, it is argued that younger generations have far greater financial burdens than any have seen before.

In fact, Millennials are thought to be the first generation ever to be financially worse off than their parents. However, many young people are active and engaged with the problems they face and have no issue with demanding change, with this being possible from their smartphones.

Conclusion

In conclusion, the use of financial technology has made pensions more interesting to the younger generation. Retirement is often seen as an ‘old-people’ problem.

By offering young people access to apps and platforms that make pensions exciting, providers and financial well-being solutions are paving the way for a generation who are prepared for retirement.