Robin Hames examines the rapid pace of technological advancement the ‘Digital Revolution’ has ushered in, and how pension schemes need to adapt to stay relevant

Among the many notable quotes from Loesje, the international organisation for free speech, the observation that “the longer you wait for the future, the shorter it will be” seems the most appropriate when considering pensions and technology.

There can now surely be little doubt that when future historians look back at this period of human development, they will observe changes perhaps even more fundamental than such turning points as the Industrial Revolution.

As ever, when living through such change, its scale and speed can often be overlooked, so quickly does the new reality become engrained in our daily life.

Annual statistics produced by Pingdom, the uptime monitoring company, show not only how rapid this ‘Digital Revolution’ has been but also that the growth continues to be exponential.

By the end of 2011, there were:
• 3,146 billion email accounts worldwide.
• 555 million websites – with 300 million having been added during the year. In 1995, there were only 10,000.
• The number of daily tweets had risen to 250 million by October 2011 compared to an average 27.3 million in 2009.
• Facebook now has over 800 million members, up from 500 million two years previously.

Over the last decade, mobile phone use has also exploded to well over a billion active mobile broadband subscribers worldwide. In fact, those who do not own a mobile phone have become a minority in many countries.

Interestingly, 350 million of its users now access Facebook through their mobile device. And those that do access in this way are twice as active compared to non-mobile users.

The success of the successive generations of iPad is a clear indicator of our continued thirst for new technology.

This rapid evolution is fundamentally changing the way we live our lives and engage with the outside world. The notion that this is all ‘new-fangled’ technology and ‘just for the kids’ is unsustainable; as each year passes technology adoption is proliferating across all generations.

Pensions, and the firms who consult on them, have to keep pace with the digital age or become swept away as irrelevant; their future could indeed be short.

We believe fundamentally that the future of member communications lies in maximising the engagement that can be achieved through technology.

However, we also recognise that today’s benchmark may seem laughably basic in only a few years’ time: a Commodore 64 compared to the latest generation Playstation. That’s why technology requires commitment and constant reinvestment to continue to meet members’ growing expectations.

With auto-enrolment now just around the corner, technology has become a hot topic with many furiously investing in the development of middleware to deliver a cost-effective, efficient means to administer the identification of employee groups, the opt-out process, record-keeping and governance. Unsurprisingly given that our Orbit online portal was one of the first to market over 10 years ago, we too have been developing in this necessary area.

However, the uses of technology go far further than this administrative functionality.

The reality is that for most scheme members the cost of obtaining true long-term independent advice is prohibitive and not something that the average employer is prepared to sufficiently subsidise either.

Given this environment, technology offers a solution to genuine member engagement. Planning tools, online education, webinars and so forth allow a degree of interaction, to suit the user’s preferences, which other media will always struggle to replicate.

And this need not be a reactive tool. Orbit issues, via text and email, quarterly valuations to members, notifies them when there have been significant moves in their fund values or when contributions have been made. We can see activity levels increase when such proactive communication takes place.

Furthermore, technology also provides the ability to bring pensions back into the wider benefits fold; too often it is an isolated issue seemingly unrelated to the broader corporate reward goals of an employer.

The future will surely be about the continuous development and galvanisation of technology to help employers make the most of their investment into benefit programmes and to allow employees to successfully plan for their current and future needs.

Written by Robin Hames, head of technical, marketing and research, Bluefin Corporate Consulting

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