The challenge of helping individuals set realistic financial outcomes for their retirement has been well documented. What remains abundantly clear is the hurdle between savers and ensuring a good standard of living in retirement, and successfully navigating such an obstacle requires a lot of financial planning. We believe the best way to overcome this challenge is to use technology to bring these concepts to life.
Technology can help individuals better understand how their future retirement plans can take shape, and what they need to do to achieve their financial and retirement lifestyle goals.
A defined set of retirement living standards
The Pension and Lifetime Savings Association (PLSA) has launched a new set of UK Retirement Living Standards (RLS), to help people align their retirement expectations to the cost of living in the future. And recent research suggests that 74% of savers believe that the Retirement Living Standards would make it easier for them to plan for retirement.
The Retirement Living Standards define three clear benchmarks for individuals and couples comprising, a minimum standard of living, moderate, and comfortable. Using a range of everyday goods and services, the standards help to illustrate what type of retirement lifestyle the individual could realise in the future.
Three defined standards of living in retirement
How can technology help member engagement?
We used our cash flow modelling expertise to work with LifeSight to incorporate the new PLSA standards into their award-winning tool, the ‘AgeOmeter’ to bring the standards to life, and provide a continuing commitment that helps members navigate their way to a better retirement outcome.
The AgeOmeter calculates the age at which members can afford to retire - known to members as their ‘LifeSight Age’. This latest enhancement lets members play around with their savings goals in line with the PLSA’s retirement living standards targets – minimum, moderate or comfortable for an individual or a couple. The AgeOmeter will now be able to give members a more relatable and detailed breakdown of predicted retirement living standards, and the changes that need to be made to achieve the type of retirement they aspire to.
A clear breakdown of predicted retirement living standards
Since launching in 2016, the AgeOmeter tool has been well received, with over 60% of contributing members using it to support their savings journey. Those users are then empowered to understand better how their contribution and investment strategy choices along with how they decide to spend their savings influence the age they can afford to retire. Members are taking time to work through the steps, spending on average 5 minutes on the tool.
Gary Wheeler, EValue’s Chief Commercial Officer comments, “Having been early adopters of the Retirement Living Standards, working with LifeSight to incorporate the standards within our modelling tools gave us a great opportunity to help illustrate the retirement prospects of members uniquely and coherently.”
Nigel Peaple, Director of Policy and Research, PLSA comments “We’re pleased to see LifeSight adopt the PLSA’s Retirement Living Standards and bring them to life for members through their modelling tool enhancement. The use of the Standards in the AgeOmeter offers a good example of how they can bring the retirement journey to life for savers and help them to think about how they might want to change their savings behaviour to achieve their desired lifestyle at their desired age.”
Jelena Croad, Deputy Managing Director for LifeSight “We’re pleased to launch this development that will support each LifeSight member to understand their savings goals better and have more control of their retirement outcome. The strength of our relationship with the EValue team has made this a smooth and efficient journey.”
We hope that the PLSA Retirement Living Standards will continue to be fully embraced by all UK pension schemes, and become the widely adopted industry standard. We also hope that providers embrace the use of technology to help communicate these standards to their members. As we mentioned at the start of this article, technology can help individuals better understand how their future retirement plans can take shape and what they need to do to achieve their financial and lifestyle goals. If providers do both, they will make pension saving more consistent for all by reducing confusion and increasing engagement. This is beneficial for schemes and their members alike.
So what next?
We provide a comprehensive range of guidance tools and retirement APIs to assist your members with their retirement lifestyle planning. Our retirement planning solutions have also been upgraded to encompass the PLSA Retirement Living Standards alongside the existing ONS (Office for National Statistics) data.
Click here if you would like to know more about how our range of retirement APIs can give you complete control of your member experience,
Alternatively, get in touch via firstname.lastname@example.org.