Insurer Aegon UK, whose poor administration cost it a £1.9 million fine and £100m of compensation three years ago, this week launched a self-service platform which gives customers digital control of their pensions and savings.
Edinburgh-based Aegon says its Retiready account is "revolutionary" and enables access via tablet and mobile to a pension account and a retirement menu of options.
It addresses the "advice gap" left by the industry's clean-up of commission-based selling, and anticipates the reforms which from next April will give retirees the option of converting money-purchase (not final salary) pensions into cash, rather than having to buy a fixed income through an annuity. Although the chancellor has promised free advice for all at retirement, there are doubts as to how that can be delivered, and pensions companies will have a critical role in guiding customers.
David Macmillan, Aegon UK's managing director, said: "The fundamental issue is we want to put customers in control of savings and income generation. I think you will find as an industry we will overlay technologies and services to make it easier for customers to take charge of their incomes. It will drive transparency and better value, and I would hand on heart say it is about time we were at this point. It is going to spark a huge amount of innovation on behalf of the customer."
Although Retiready was "a single point of access" to long-term savings, it also offered links to external advice sources, Mr Macmillan said.
He added: "Companies like ourselves are going to have to create services with digital payments in and out, a bit more like a bank....services we put on top of products we already have rather than a new generation of products." Someone wanting guaranteed income would end up with some form of variable annuity (where you buy a lower income but flexibility to change) Mr Macmillan said.
That restricted market would now broaden, offering more choice at lower cost, he predicted. Income drawdown would be available as a platform option for those unwilling to pay fees for advice. Instead of the "wake-up pack" sent to customers ahead of retirement, pensions companies would realise they had to engage with savers at an early stage through interactive technology. Pension and Isa accounts could now be checked while watching TV, Mr Macmillan said. "We have simplified, digitised, removed paper, and enabled it to work on a phone screen."
He said Aegon with 2.2m customers had "hundreds of thousands" who had no adviser, usually because they were in a workplace pension scheme. Retiready, the self-service version of the company's At Retirement Choices platform for financial advisers, slims down the investment choice from 4,000 funds to five. It has a flat fee annual charge of 0.3% for all assets up to £250,000, and allows minimum investment amounts of £200 a month or £2,000 lump sums. It also reduces the minimum investment in drawdown from £50,000 to £20,000 in response to the relaxation of limits in the Budget.
Mr Macmillan said Aegon was now working on a workplace version of the platform as well as one aimed at savers from age 45 upwards.
The launch was accompanied by a survey of over 4,000 adults which found only 7% likely to retire on the income they desired. Only 31% of Scots had ever checked the performance of their existing retirement savings, and only 3% appeared to know how to take steps to improve their position. The average desired income in retirement was £35,000 a year, but the average likely outcome was £12,000.
Mr Macmillan said: "It's time for the UK to get real, and for the pensions industry to lead the way in helping people find solutions. Showing people how to take small steps that will make a difference is vital."
Meanwhile Royal London, the UK's biggest mutual insurer, which snapped up the Cooperative life insurance business last year, will next week launch a new direct-to-consumer web platform selling insurance products, and is hinting at a web-based advice service.
Phil Loney, chief executive of the group which has major operations in Scotland, said the radical Budget changes meant most people would need a real adviser on their retirement options, not merely the 'guidance' promised by the government, "to help them access the best deal in the market rather than the option that their insurer is trying to push".
Mr Loney said the Financial Conduct Authority could enable "new focused advice delivered through the internet" at a fraction of the current costs.
Mr Loney added: "We recognise that there are a number of sections of the population who will never turn to a financial adviser."
There were also several areas where customers were palmed off with "poor value products or incomprehensible jargon-filled buying processes", such as the "over-50s" life plans widely advertised on TV.
"This remains a very popular product with people who have low levels of lifetime savings but want to leave a legacy after their death. It is also a market which has historically offered poor value for money for many customers.
"We are looking to completely transform the over- 50s market by offering a straightforward, value for money product."