The upgraded tool shows scheme members how much they should be saving
Smart Pension, one of the UK’s leading workplace pension providers, today launches a new integrated retirement savings calculator that could have a hugely positive impact on the projected pension savings of its 1.4 million-strong UK member base.
The new interactive tool is designed to help members model and predict the monthly pension contributions required for a comfortable retirement. It allows individuals to see how much they’re saving and view their expected retirement income against the PLSA’s Retirement Living Standards.
From there, members can change and review scenarios based on different retirement ages and monthly contribution amounts, clearly seeing the financial outcomes they could achieve in retirement with a small change to their contribution amount. The game changer is that users can instantly adjust their monthly contribution amount or retirement age live in their account, at the touch of a button.
Although more Brits than ever are now saving into a pension pot thanks to auto enrolment legislation, it’s reported that 90% of Brits are still under-saving for their retirement, and many don’t even realise it. While some savers underestimate how much money they will need to maintain their standard of living in retirement, many others are unaware of how much they’re currently saving each month and what that might provide them in retirement.
The calculator was designed with the Fogg behavioural model in mind, aiming to make it as simple to use as possible. It brings together both personalised financial information and the ability to act on it in one place. Following Fogg’s combination of ‘motivation, ability and prompt’, we are delivering market innovation. All of this is only possible due to Smart’s proprietary technology platform, Keystone. It removes the need for manual processes and enables the calculator to link directly to individuals’ pension accounts, so that they can change their monthly contribution level instantaneously.
The end result is a personalised illustration allowing members to quickly understand where their savings are at and if they’re saving enough. Being able to make immediate changes to contribution levels means less stress and increased peace of mind for savers.
Take the example of a 32 year old earning the UK average wage of £35k per year, who starts saving for retirement now and plans to retire at 67. If they increased their contributions by just 2%, from the current 8% minimum to 10%, they could see an extra £3,000 every year in retirement1.
This shows the drastic difference small actions can make to their long term savings forecasts, alongside making informed financial decisions and planning ahead.
Comment from Eve Read, Senior Director of Strategic Delivery at Smart Pension:
“We recognised that lots of UK savers don’t know how much they’re currently putting into their pension pot each month, how much they should be saving and what will be enough to retire on. Information on retirement standards is in lots of different places so we wanted to bring it all together, with an instantly actionable solution.
“This is just one step among many aimed at improving our online tools and services to help members get the best out of their pension. Our technology allows us to continually iterate our solutions to ensure they meet the changing needs of UK savers. We’re excited to see the positive impact this will have for our members and their savings moving forward.”
1Outcomes will differ based on individual circumstances. Example has been modelled based on various assumptions including: 4% drawdown rate, annual inflation of 2.5%, annual pot growth of 5%.
