I feel blessed as I’m able to spend time speaking to our customers and learning about their rich and unique lives. These conversations help to uncover insights about pensions, more specifically what works for people, and what stands in their way and prevents them from enjoying the journey to a comfortable retirement.
At PensionBee, we think it’s important to amplify our customers’ voices, whether through the national media, industry press, or internally, so that we can help all of our customers achieve better pension experiences.
Looking back over 2020, I feel excited about how our customers have spoken out to a wide audience.
Here are three examples:
28-year-old Sarah is from Stockport and self-employed
The Financial Times recently featured our customer, Sarah, in an article about how pension savers are responding to the pandemic.
The pandemic motivated Sarah to save more. She saw friends being put on furlough and being made redundant, and felt that she should take advantage of the fortunate position she was in, as her company was doing well. “I decided that while I can, I should really pay more money into my pension,” The FT article reports.
Sarah talked to us about the role her family has played in inspiring her to save. She has selected her nephew, who was born last year, as a beneficiary, and her brother initially introduced her to PensionBee.
Her mother also plays a strong role, and has been encouraging Sarah to save into a pension since she was a teenager. Seeing how her mother’s saving decisions had impacted her also highlighted the importance of her pension, “She has to adjust to a lower standard of living in retirement. She didn’t think about her pension until her late thirties,” Sarah told me.
Sarah also described her experiences of increasing her contributions at PensionBee, “When I want to up the payments with PensionBee it’s straightforward. My short-term goal in the next 12-18 months is to up my contributions again. I put it to £280 a month, but my target is £300, because when I was playing around with the tools, that kind of seems like the best amount to be paying in, because that’s what I can afford. If I can do that, it seems like a good outlook for when I come to retirement age”.
Sarah’s story shows that pension providers can support customers by making it easy for them to contribute, and to update their contribution levels as their financial situation changes. Additionally, digital planning tools are effective in helping customers take control of their savings and better plan for retirement
Sarah is one of our many self-employed customers. Our analysis shows that the gender pension gap is least pronounced amongst self-employed customers, at 33%, compared to 38% for employed customers. This grows to 56% for employed women aged over 50, and only 35% for self-employed women in the same age bracket. The self-employed are completely responsible for their finances, and this insight suggests that empowering them with tools that make managing their pensions easy, can help to close the gender pensions gap.
67-year-old Frank is from Hampshire and retired
I spoke to Frank earlier this year, and he told me about his difficulties being able to access his money when he retired, and before he joined PensionBee, “I found it very difficult to get clear information, particularly on charges. Charges are often very complex. Investment charges, fund charges, charges every time you drawdown, and they seem to mount up. My providers insisted that you spoke to what they called their advisors, but when you spoke to them it turned out that they were Independent Financial Advisers. I was not interested in that. I was a chartered accountant by profession and I didn’t feel I needed to speak to them about how to budget and how much money I could spend.”
He also talked about the challenges he faced when trying to understand how much he had already saved, and generally interacting with his pension. “Their systems are just old fashioned. The presentation of it and the amount of information that is available. It is online but looks like something out of the 1980s. It’s on a PC, not an app or a phone. Normally with pension money you don’t look at it that often, so it wasn’t a problem not having it on a phone. Coming up to drawdown I was looking at it more frequently. That’s where PensionBee scores highly, the simplicity of it. The capability to just go ahead and put the funds across and get to drawdown, and the simplicity of the funding charges.”
This experience was shared nationally, in the Sunday Express, in a piece about how pensions are not serving the over-55s well, and Frank was quoted extensively, which helped to bring attention to this issue, and highlight what consumers need.
Findings from our survey of consumers earlier this year echoes the need for simplicity and a sense of control, and indicates that this encourages people to keep more of their money invested, with almost 60% of those who have considered taking their money out agreeing that if they knew they could access their pension easily, they would be more likely to leave it where it was. Almost 50% of those who have considered accessing their pensions say that having a phone app to see their balance and pay in would encourage them to keep their pension invested. Similarly, about 50% of those who considered accessing their pensions feel that taking money out means they would feel more in control of it.
Over 2020 we’ve seen customers respond to the pandemic by keeping more of their money invested. Only 20% of our customers aged over 55 took money out in Q2 2020, compared to 33% during the same period last year. Similarly, only 24% took money out in Q3 2020, compared to 29% at the same time last year. This indicates that giving customers control of their money helps them to respond to changing financial circumstances, and make decisions that are better for them.
49-year-old Lester is from London and employed
Lester is switching into our new Fossil Fuel Free Plan, and recently shared his motivations for doing so. He is being driven by ethical as well as financial concerns, “The idea that I may be inadvertently funding companies that are not investing for the planet concerns me. Secondly, some of the environmentally sustainable funds could actually be good financial investments - some studies are showing that investing ethically could be a good move. I know that there are regulatory changes happening in that space, I know the market, in terms of consumers, is going to vote with its feet in terms of moving more towards these kinds of investments.”
It’s customers like Lester, speaking to us about their concerns with investing in fossil fuel producers, through phone calls and surveys, that gave us clear evidence of customer demand for a new mainstream Fossil Fuel Free Fund, which we’ve created in partnership with Legal & General. We found that a quarter of customers in our existing climate focused, Future World Plan, would prefer to divest from fossil fuel producers at the outset, rather than engaging with companies to drive more sustainable business practices through their existing plan.
We were given a customer mandate to act. We searched the market, and found a dearth of existing options, and that’s why we took our customer feedback to our money managers, who have now produced a new fund. This new plan will exclude companies that own proven or probable reserves of oil, gas or coal, as well as tobacco companies, manufacturers of controversial weapons and persistent violators of the UN Global Compact.
The asset management industry didn’t think there was demand for this type of investment product. Our customers have since shattered this belief by sharing their views on what kind of companies their money should be invested in, and choosing to drive positive environmental change with their pension.