Digital platforms boost member engagement with their pensions
More retirees are taking their retirement benefits through tax-free cash and investing the remainder in an Approved Retirement Fund, says Bobby McDonnell, Corporate Pension and Risk Development Manager at Bank Of Ireland.
However, finding an investment strategy that can deliver solid, consistent returns has proven to be a challenge. Bank of Ireland recently announced a new partnership to launch PruFunds in Ireland, a very popular retirement savings product in the UK.
“All too often we meet people who have a pension in place, but they have absolutely no idea what the value is, how it is invested, what it will be worth at retirement, and what their options are now and at retirement age,” McDonnell explains.
He adds that the implementation of digital platforms such as Bank Of Ireland’s MyPension365 has allowed members to access real-time information on their terms.
In McDonnell’s view, this access to information is vital to overall member engagement, as it allows pension fund members to see their pension as a
tangible asset, rather than something they do when they start working and never think of again.
“This level of access enables them to consider their financial wellbeing on an ongoing basis, adjusting accordingly as they move through various stages of their working lives,” he says.
The introduction of the IORP II legislation has changed the pensions landscape and compelled employers to make decisions on the future shape of their benefits packages. “The shift to a Master Trust is the obvious next step for the majority of the companies we are working with today,” says McDonnell.
“Some clients that have opted to go down the Group PRSA route rather than provide a scheme where trusteeship is required. Most have weighed up the options and the Master Trust is the preferred solution, especially for employers with larger staffing levels.”
In its recent report, the Commission on Taxation and Welfare recommended the removal of annual age-related pension contribution limits. Bank of Ireland would welcome the removal of limits, to encourage savers to put aside as much as possible, subject to a reasonable lifetime maximum.
However, McDonnell acknowledges there is a rationale behind the existing system. “There is a life cycle to finances which reflects increasing earnings over time. The age-related system allows more saving with tax relief when more cash may be available. It allows a ‘sprint to the finish’ if you can afford to save more before retirement.”