There is a lot happening with pensions at the moment. The imminent introduction of the “pensions dashboard” will give people a clearer vision of their retirement investments than ever before and every day a new challenger brand is launching to democratise the pensions industry. In this interview, we speak to Lindsey Rix, the CEO of UK Savings and Retirement at Aviva, one of the largest pensions providers, to see what they are doing to keep competitive and on the importance of engaging with your pension as soon as possible.
There’s been a lot of development in the fintech world recently with innovative challenger providers. What is Aviva doing to keep up with how people are beginning to invest in the fintech era?
It’s actually great to see the challenger providers coming into the market. I think it’s important for the industry, that it keeps the pace of progression up and keeps the pressure on each other.
We have to get pensions out of the digital stone age. That’s where they’ve been for far too long. Eight out of ten internet users manage their bank accounts online, but we only see one out of ten managing their pension online. Think about the amount of money you have invested in a pension versus what might be sat with your bank. I often find it quite fascinating to think about kind of the individual connection people have with their bank accounts and the relativity of that to the connection they have with their pension. It’s incumbent upon us as providers to help that progression and make it easier for people.
At Aviva, we’re very proud of the things that we’re doing to help individuals access their pensions more readily. On our My Aviva platform, we already allow more than five million customers to manage their Aviva products online, when they want, where they want.
Our pension customers actually, of all of our product holders, are the most active out of all of them. We’ve seen that increase quite dramatically as well over the course of this year, which probably won’t be a surprise to you.
We also have a “My Retirement” planner online tool, which helps people to understand how much they have in their pension pot, or how much they may have in their pension pot by the time that they reach their retirement. It also enables you to model it through using toggles and sliders, so that you can understand what the possible impact is of saving more now to get your pension pot later on in life.
We’ve had about a million people use that free tool online as well, which is great, but clearly, we want more to be doing that.
We’ve also just launched our free mid-life MOT app, which allows anyone aged 45 to 60 to receive free guidance on the management of their wealth, their work and their wellbeing. It’s the fastest-growing but most stressed working-age group in the UK, so really important that we can provide as much help as possible to people through that period of their lives.
More broadly, in the industry, we are really big supporters of the planned pension dashboard. I think it’s been long in coming, and we really want to push on and get this out there to people as soon as we can and work across the industry to do that. To allow savers to see all of their pensions online in the same place will be really very powerful, and hopefully, will help people engage more with their pensions and their longer-term savings. People often have more than ten employers in their working life, therefore, ten work-based pensions, which can quite frequently be in ten different places. So actually, the need for this dashboard is greater than ever. We’ve set ourselves as an industry a target to introduce the dashboards from 2023 and we’ll support this in whatever way we can.
Do you think it’s a double-edged sword, that by giving access and allowing people to tinker with their pensions, that there’s a slight danger that people are going to start trying to time the market where they shouldn’t?
That is a fascinating question. I think engagement is good, so I think people thinking about planning, engaging in their long-term future is so important. And actually, if we can give greater access and visibility and transparency to people and help them understand that, the small things they could be doing today that could have greater impact in the future, which you start to see if you get a greater level of engagement and education. I think that will be better for people in the longer term.
At the start of the crisis, one of my big concerns was that people would take money out of their pension, because of worry about the pandemic, worry about the market and wanting just to hold their cash. I had a fear that we were going to see many people make the wrong choices, and actually, I was proved to be wrong, which I was delighted about. Thankfully, we didn’t see that flight to cash at exactly the wrong moment in the cycle.
To answer your question, “If people were engaging more with their pension, would that mean they would tinker with it more?”, actually, what we saw at the start at the crisis when I thought people might be engaging with it more in a different way, I was pleased to see people reflect and still think about their long-term saving. If anything, we saw people hold more over that period, so our normal levels of outflow actually decreased through that period as people held tight, which was undoubtedly the right thing to do at that point.
Do you think we’ll ever see pension education and teaching children about investing in the stock market in schools?
I’d broaden that out much further actually. So I wouldn’t answer your question with regard to pensions. I’m a big advocate of actually teaching applicable maths in schools. Teaching how can you help children understand that what they’re learning in their maths lessons applies to their lives, whether that be through how mortgages are calculated, how interest rates work, how saving for your pension works, or what the stock markets do. I think there is something to be done around education in that broader sense actually.
Then beyond that, there’s a huge responsibility for us but also for employers to help their employees as they start out on their pension journey. Being able to access the types of tools that we provide and we provide it through some of our workplace customers as well to help their employees understand what might they be thinking about saving on a monthly basis at this point in time in their career and making sure they’re really thinking about it as early as they possibly can be.
We think frequently about three rules of thumb that we’d advocate, which are around the 40-year rule. Aiming to be actively saving for your retirement at least 40 years before your target retirement date. About the 12% rule, so trying to save at least 12% of your salary in your pension every month, and that can obviously include money from your employer as well. And the ten times rule, so aim to try to save the equivalent of at least ten times your salary in your pension by the time you want to retire.
That might sound like a lot of money to people but actually, if you start early, it’s quite interesting to see how quickly some of that can build up.
There’s a big difference between saving money and investing money, particularly with rates so low. Do you think that’s a particular challenge, converting savers into investors at the moment?
We do have 20 million people investing in their pension in the UK, so that is quite a lot of people already who are investing. It’s a record high. In 2019, we saw the majority of working-age adults investing into a pension, obviously dramatically driven by auto-enrolment, which has been a big success.
Pensions represent the biggest source of private wealth in the UK at £6 trillion, so it’s more than in any other financial product. There is more to be done around engagement.
I go back to my previous answer as well around engagement, education and empowering people in investments, bringing them closer to them so they understand them more. Building trust in the industry is incredibly important, so people are comfortable, both with saving in cash, as well as for longer-term investing, where they will get a longer-term but potentially better outcome for themselves.
I think digital tech can help that, can help give people more direct control.
As well as being responsible for savings and retirement, at Aviva, I’m responsible for Wealthify. Wealthify plays a very important role for certain types of savers, which means we offer a broad range, both of digital journeys that customers can invest in, but also, we think it important for many of our pension customers to have the opportunity to talk to people as well.
In the six years you’ve been heading up savings and pensions at Aviva, what’s the best part of what you do, and what’s the worst part?
I’ve been in financial services, and I’ll say it, for over 20 years. Scary as it is, I’ve done a variety of roles.
I’ve actually only been working in savings and retirement at Aviva for the last three years. I worked in our general insurance business before that, but I’ve also worked in banking prior to that in my career. I’ve done quite a lot of different roles within financial services, and in all of those roles, the best thing about my job is making a difference to customers and to customers’ lives and helping them.
I like to think about what we’re able to do, both today but also what we’re planning on doing in the future to help customers who need us, and to help remove some of the worries that people have. Particularly when you think about savings and investing, it’s such an important thing for people, for their lives, but actually, for many, it’s really very complicated. It’s not something that they have to deal with on a day to day basis.
The more we can do to help people navigate and understand pensions and take some of their worry away and let them focus on the best lives that they want to have and achieving the goals that they want to have, the better.
I have to talk about ESG, too. It is the topic that is so fundamentally important. It’s important that we think about it, and we think about the impact that we are having on our climate and presenting investing as a force for good in this sense is incredibly important and very motivating for many investors. We’re able to give customers access to funds and solutions where they feel that they can have a personal impact on the world that they’re living in.
Does Aviva have specific ESG products for impact as well as ethical investing?
We do. We’ve also committed to making our largest fund, which is our default pension fund, net-zero by 2050, in line with the Paris Climate Agreement. We’ll try to do it quicker, but that’s our absolute commitment that we will do that.
We see more and more younger investors really very passionate about this issue in particular and being able to provide a range of ESG investment options is really good, both for the planet, but also, to get people engaged in the power of investing.
What’s the worst thing about being in charge of everybody’s savings and pensions?
I don’t think there is a worst thing, to be honest.
The brilliance of my job is the amount of people’s lives that we can touch and help. I also love the fact that no day is the same for me. It’s a very diverse job. We’re thinking about lots of different issues, whether they be macro or whether they be things that we’re developing internally, or whether they be how we’re changing the business or how do we cope in the crisis that we’ve just been through.
There’s all sorts of diversity within the job that just makes it exciting. I don’t think there is a bad thing about it. I guess the only thing, and I’ll be probably with many others on this, is just you’d like a few more hours in the day sometimes, wouldn’t you, so you could get a bit more done.
Do you have a favourite book on savings and investments?
No is my very swift answer.
I don’t tend to read management books, or money management books. I think in this day and age, we’ve got so much at the end of our fingertips that we can be continually learning and accessing. I’m a bit of a social media animal, so I love reading things on Twitter. I love digging out reports. We get daily updates from different briefings from different organisations that you can access and read and digest, and that’s all live and real time. I find that much more beneficial for what I’m doing on a day to day basis.
What’s the one bit of advice you could give to help people manage their pension better?
I would say to take control of it, to engage in it.
Many people don’t. As we’ve said before, either they think it’s too complicated, they don’t understand it, they don’t have time for it, they sometimes put their head in the sand around some things particularly, or it’s just too far down the road for people to be thinking about.
My advice would be to all of those people to try and take control and engage with it. Seek help, talk to people. The earlier you can do that, the better.
We’ve launched a service whereby people can book a time and can talk to someone about particular topics that they’d like to know more about. I’d also say there’s a lot of good information online now. Us and many others are trying to make it far more accessible to access and to understand more about saving and more about your pension.
I’d also go back to my earlier point that I think employers have a big responsibility to help their employees understand more about their pension. We will help that through the employers that we work with, but I’d also say to people, they should be demanding of their employers as well to help them understand more at an earlier stage.
Lindsey Rix is Aviva CEO of UK Savings and Retirement
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.