Corporate platforms offer an integrated way to manage pensions and savings benefits that should boost engagement, says Holly Mackay
Corporate platforms (or corporate wraps, as they are also known) are the latest tool to be crafted by the retirement savings industry. They are designed to house workplace savings, which have traditionally comprised a pension and perhaps a sharesave scheme or share incentive plan.
However, these platforms have added other savings vehicles, most commonly an individual savings account (Isa) with its potential for cash and other investment options. Employees are supported by tools designed to inform, educate and engage and the whole mechanism is housed not within a human resources department, but technology. In some cases, the platform provides a brand new offering, in others a repackaging of existing benefits. But what do they offer that would attract an employer?
Let us consider the employer's perspective. In an ideal world, an organisation would design its benefits from scratch and, in this situation, a corporate platform potentially ticks lots of boxes because it offers four key things.
Firstly, benefits and choice for a diverse workforce, including solutions for younger employees, high earners and employees looking for better terms. Secondly, a simple arrangement with technology that enables efficient and cost-effective administration and a joined-up solution. Thirdly, increased employee awareness and appreciation of benefits together with a sense of ownership and empowerment to plan their own financial future. And finally, easy access to information, reducing the number of enquiries, and employers have valuable data with which to monitor and develop their benefits strategy.
Of course, in the real world it's never quite that simple. Add into the mix existing benefits, systems and providers; compliance with new legislation; limited time and resources; rules and regulations; employee's expectations; budget constraints; wider business objectives; the range of options available, and so on, and you could be forgiven for wondering whether a platform would suit your organisation.
However, a number of employers have already embraced the concept as a part of a review of their pension benefits, and not just large employers with a reputation for cutting-edge processes or benefit design.
Advantages from the employee's perspective include six elements. Firstly, immediate access to information, education and guidance in easy-to-understand, digestible chunks. Secondly, engaging tools that enable effective planning for savings and debts and can link to short-, medium- and long-term goals. Thirdly, 24/7 access and the ability to use a range of media, including phone apps, helplines and video. Fourthly, increased awareness and understanding of benefits and help to decide on options. Number five on the list is a choice of savings vehicles and investment options to fit with individual circumstances and goals. Finally, vehicles selected and competitive terms negotiated through the employer.
A corporate platform can provide much-needed support for staff, but whether they will engage with it as hoped remains to be seen. Many trust their employer's help but will need triggers at appropriate times to encourage use of the tools and options available. Both communication (at the outset and ongoing) and convenience will determine whether the appropriate level of engagement is achieved. It is an evolving solution and all parties need to be in it for the long haul.
Most platforms introduced recently have reported a rise in take-up and contribution to pensions and, as we approach auto-enrolment, there are obvious benefits to employers of engaged enrolment rather than disengaged auto-enrolment.
Take-up of workplace Isas is smaller and varies between providers. Will staff utilise this option? It is early days yet, and of the nine platforms on the market, most have launched only recently, but providers tell us there is currently £300bn in Isas outside the workplace.
Time will also tell whether wider investment options will appeal to employers and employees alike. However, it seems logical that clever use of technology in building these platforms can only assist employers in understanding and helping their often diverse workforce.
Holly Mackay is managing director of The Platforum
Read more from the Workplace Savings Quarterly