How technology is pushing forward pension reform

Ageing is a simple fact of life.

Those of us who work a regular job will at some point need to take a step back, retire and enjoy our older years in peace. In order to do so comfortably, retirees need savings to live on, to provide financial security and stability.

As universal as this need may be, the world also faces equally universal challenges. Not enough working people are saving for their retirement globally. People are living longer, and the number of people working is
falling while the number of individuals in retirement is going up.

The Middle East is no exception.

People in the region work hard, but many don’t have adequate savings for when they want to finish working. In the UAE, 45 per cent of residents say they have not started saving for retirement, yet 63 per cent say they want to retire before they turn 60, according to Friends Provident International Fund.

At the same time, the size of the working-age population in Arab countries is expected to fall by over 25 per cent by 2060.

This means governments and public pension funds have started to urgently think about how they need to adapt and modernise to provide better systems for workers. And financial institutions are looking at how they could launch compelling new solutions for workplace saving products.

Some areas of the Middle East are increasingly looking at how they can learn from the successful savings reforms that have been implemented in territories like the UK, Australia and Hong Kong.

Enabling engagement
A big part of this challenge is getting savers engaged with their pensions and workplace savings: getting them to be aware of what they own, protecting the funds they are growing, how they can manage their savings, and what their employer can do.

This should be straightforward. For some, a pension could be the biggest investment they make in their lifetime. However, it is often fraught with difficulties.

For example: How do you make sure you can choose your own investments in a way that is intuitive and responsive? How can you view your pension at a glance, across multiple devices, in a way that combines cast-iron security features with ease of use?

How do you change key details – addresses, contact information, bank accounts, and beneficiaries – in as simple a way possible? And – importantly – how can this all be administered without great cost?

Twenty years ago, these problems did not have easy solutions. Too often, they were bureaucratic nightmares involving multiple companies and authorities, with little interest in cooperating to serve the retirement saver in a way that made sense. This meant overburdened corporate HR teams and frustrated savers.

Change is afoot
Thanks to new financial technology, however, this is now changing.

We, as a fintech company, are part of this change.

New technology has been put towards pension reform around the world, including in the Middle East. A new generation of fintech firms can make pensions easier and cheaper for organisations everywhere to provide, enabling the digital transformation of workplace savings systems.

They are using the very latest in technology to give retirement savers the experience they’ve come to expect from best-in-class e-commerce sites and online banking.

For example, apps are now emerging, which significantly simplify retirement saving for everyone, capable of running natively in either Arabic or English. Once logged in, they provide user-friendly dashboards  giving an overview of existing investments, and clearly signposting the different products and options available to the saver should they wish to adjust their retirement strategy.

It’s also easy for employers. A company with thousands of employees means many workplace pension schemes, all processing different sums from different salaries, as well as signing up and sending off new and old employees.

Without good pensions technology, keeping track of all of this can be a huge administrative burden. Freeing this up means more capacity for HR and finance teams, with huge savings as a result.

This level of user-friendliness is a must. If we want savers to have a stake in their retirement outcomes, their savings cannot simply be siloed units on a hard-to-navigate Web 1.0 platform, designed for people in a different country speaking a different language.

If you marry a high-quality user experience with the capability to enroll millions of members into schemes at virtually no added cost, itself enabled by technology, you have the chance to completely change the retirement landscape and bring about a genuine savings culture.

Tim Phillips is the managing director of Smart Middle East