The role of pension modelling tools in a pensions strategy

When it comes to engaging employees with their pensions, one of the biggest challenges for employers is making a distant future event, retirement, feel relevant today. And this is where pension modelling tools can make a huge difference, by allowing employees to see projected outcomes of their retirement income at different savings rates, and to visualise how decisions they make today could impact their future lifestyle.

Pension modelling tools help both employers and employees, in the case of the latter, to make better decisions about retirement saving, says Mark Futcher, partner and head of defined contribution (DC) pensions at Barnett Waddingham. “For employers, they offer insight into how their scheme is performing, and whether it’s meeting the needs of a diverse workforce,” he says. “For individuals, they provide clarity and guidance, helping people avoid poor outcomes and work towards a retirement that suits their needs and circumstances.”

Interactive pension modelling 

The tools vary significantly across providers. Some are built into user dashboards with real-time data, while others are generic and standalone. The most effective ones are intuitive, interactive, and personal, helping people answer questions such as ‘am I on track?’ and ‘what should I do next?’

Obi James, leadership and workplace expert,  says: “These modelling tools help to turn fuzzy ‘I hope it’ll be enough’ feelings into clear pound-and-penny targets, so everyone, from our often younger, emerging-leader cohorts to board-level clients, can see instantly whether their contributions back up the benefits brochure. Without that reality-check, people would steer the scheme by guesswork instead of data.”

Employers often make the mistake of believing that pension savings are of most interest to those approaching retirement. But research published by Zest in January 2025 shows that, in fact, younger employees are more concerned with their retirement savings than their older colleagues; 79% of 18 to 34-year-olds stated they want their employer to increase pension contributions, compared to two-thirds (66%) of those aged over 55.

Matt Russell, chief executive officer (CEO) of Zest and Epassi UK, says: “Benefits that help employees manage their finances are vital in modern workplaces. One way that employers can enhance this strategy is by offering pension modelling tools to help employees better understand their pension, improve their visibility of it, and forecast their savings for retirement.”

Pensions engagement

However, engaging employees with pensions modelling tools and, ultimately, their future retirement finances can also be challenging. Aligning the tools with the employer’s pension strategy and effectively promoting them is key to ensuring take up and engagement by employees with the tools as well as their pension. 

“An easy-to-use benefits technology platform, coupled with targeted communication and personalised notifications, will help to foster greater engagement with employees of all ages; be it someone approaching retirement, or a younger employee who has just entered the workforce but looking to start saving as early as they can,” adds Russell. “This approach also enables organisations to ensure that employees fully understand what support is available to them. Effectively communicating to employees that they can now use a pension modelling tool is as important as offering it in the first place.”

The challenges around engaging staff with pensions could be eased by reframing something that will happen in the future to something in the present, says Josh Hart, co-founder and CTO at YuLife. “We need to create a shorter gratification loop, as so many other industries have already done,” he explains. “It’s not just about pensions, it’s about holistic financial care. We need to see our money and our lifetime as one present, continuous activity, one that evolves, and one we can actively participate in.”

Support retirement outcomes

Since the arrival of auto-enrolment, employers have adopted a greater role in supporting employees’ long-term financial wellbeing and retirement outcomes. Modelling tools are a key part of that, helping employers to set the right framework and empower their employees to make the most of it, without crossing into regulated advice.

And with the proposals for targeted support announced in June 2025 under the Financial Conduct Authority’s (FCA) Advice Guidance Boundary Review, the coming years could reshape how these tools are delivered. 

Futcher says: “This could allow employers to offer guidance based on the behaviours or outcomes of employees with similar circumstances and help them make better financial decisions, drawing on relevant data insights without needing full financial advice. Meanwhile, advances in AI are set to enhance these tools further, making forecasts smarter, more intuitive, and better tailored to individual needs.”