What are pension funds and pension administrators up against?
Loranne: ‘The Future Pensions Act calls for quite a transition for pension funds and pension administrators. On top of all the administrative changes, these parties are also obliged to guide their participants in making good pension choices. This is a new role and this step is causing cold feet. At the same time, many pension funds and pension providers underestimate the possibilities of fulfilling this role. It is a lot easier than they think! The technology is there and the tools are there. It’s just a matter of connecting, the wheel has already been invented.’
How is it with pension funds and pension administrators who already use this technology for choice guidance?
Petra: ‘Their participants experience the tools as positive. To illustrate: In November, pension fund PGB won the audience award at the presentation of the ‘Pensioenwegwijzer 2023’ with its Financial Insight Tool (FIT). Participants use it to quickly list their income and expenses and can play with the various scenarios. It is precisely with these scenarios that pension funds and pension administrators can positively entice participants to start using the tool. ‘See when you and your partner can retire’ sounds significantly more appealing than the cautionary tone you often hear when it comes to retirement.’
How far can pension funds and pension providers go in their guidance?
Petra: ‘Pension funds will in any case have to guide choices around retirement, such as retiring earlier or exchanging old-age pension and partner’s pension. Once participants make use of the tool, you as a pension fund or pension administrator can also make good suggestions that participants can start using now. Think about pointing out the possibilities offered by a product like an annuity, for instance. And that’s okay too! As long as no reference is made to a specific product from a specific provider. The guidance the AFM has written for this purpose has deliberately been kept flexible so that funds and pension administrators are free to interpret this guidance. Pension funds and pension providers are also allowed to take that freedom.’ Loranne: ‘My sister is 10 years before her retirement date. I reviewed with her the options for retiring earlier. This is quite a chore when you want to take into account the mortgage that still needs to be paid off, savings that can be used to bridge a period without an AOW and any changes in her spending pattern after retirement. She would be so helped by a tool that combines all that information and gives her concrete options. Then it would probably turn out that she is quite capable of retiring earlier.’
What makes you like to emphasise the positive aspect?
Petra: ‘Some have learned from home to handle money carefully and think ahead, while others have no idea. My parents made me work by myself to raise the money for my driving lessons and driving test. They really did that to teach me that financial awareness: how much do you need to do what you want and how do you make sure you have that money later? It actually works the same way with pensions. If participants are given suggestions in such a tool to achieve their goal, such as retiring earlier or being able to retire at the same time as their partner, you activate participants from a positive drive.’ Loranne: ‘SPW, pension fund for housing associations, deliberately names that positive. They say, ‘whoever works at a housing corporation is good for someone else.’ Therefore, we are good for these employees.’ Through the combination of a holistic tool and relationship managers who visit the housing associations, SPW deploys a nice total package to guide their members in making good choices around their retirement.’ Petra: ‘What I like about choice guidance and the use of the tools is that this way many more people get access to personal and independent financial advice free of charge. That access will indeed be even better if pension funds and pension providers work together with employers in this, and possibly additionally with an independent financial adviser.’
Why are Ortec Finance and Yellowtail Conclusion deliberately pulling together in this mission?
Loranne: ‘What binds Ortec Finance and Yellowtail Conclusion is our vision that pension funds and pension providers should seize the opportunity to use current technology to motivate participants to make the right choices around their pensions. And that a complete financial understanding of the participant is necessary for this. Choice guidance can really be arranged quickly, well and cost-effectively.’ Petra: ‘Through the collaboration between Yellowtail Conclusion and Ortec Finance, the tool is already complete. Ortec Finance provides the calculations that participants need for that overall picture to make good choices and Yellowtail Conclusion ensures that the tool is easy to link with the pension administration and is logical and user-friendly. Virtually every pension fund and pension administrator can easily connect the tool available from us. And pension funds and pension providers that also communicate positively with their participants will be able to increase the success of their decision guidance even further, thus making the financial lives of their participants easier. And that is what drives us.’
