OK, gents, ties off I think — we are brainstormin’, after all! So, how the heck do we get 20-somethings to save?”
“Er, we do some sort of app?”
“Brilliant, Charlie! With games. And sports betting. And Pokémon!”
“Or — and this might seem a bit radical — we don’t call them ‘pensions’. At all!”
“Woah, Steve, you’re blowing my mind! You mean, we could rebrand them as…”
“Pots. ‘Life choices pots’. No, wait, even better: ‘Freedom pots’!”
“Stevo, you’re on fire! But who do we get to design these pots?”
“That’s easy: we rent a warehouse near Silicon Roundabout, ship in some retro furniture, and lure hairy hipsters from Google to curate artisanal annuities.”
“Like it, Marky. Sorted! Pub, anyone?”
Now, I am not claiming that this is an accurate portrayal of the product development process at leading financial institutions. I made up the reference to Pokémon. But pretty much everything else is based on genuine marketing strategies, as reported in the FT of late. It seems that, in their keenness to avert a looming savings crisis — and hit sales targets — pension providers really have turned to apps, pots and beards.
Scottish Widows, Aegon and Aviva are offering apps and online tools in the hope that phone-fixated social networkers will extend their self-obsession to self-reliance. In Australia, pension apps even incorporate footy betting, I read. Give millennials an app and they’ll be asset allocating in no time, suggests Charles Reeves, Aviva’s global digital product director — because, as he puts it, “digital technology gives people super powers”.
It is easy, and perhaps unfair, to poke fun at honest attempts to overcome the obstacles to long-term financial provision. For too many millennials, these obstacles are — like Aviva chin whiskers — many and growing
To avoid putting superheroes off the idea of superannuation, Steve Webb — once of Whitehall, now of Royal London — has even suggested dropping any reference to pensions or pensioners, given the negative connotation these terms have for the younger and more hirsute. “Call it your freedom pot, or your life choices pot, or whatever,” he says. “It means you can have a conversation that isn’t about pensions, but [about] your life choices in later life.” On Twitter, the conversations have been a little less two-way, and a lot more sarcastic. “This dude’s a genius. I’m all about my Freedom Pot,” quipped one FT colleague. “Sounds a bit like one of those portable wee-wee things you can take to music festivals,” said another.
And how are these financial services groups coming up with such ideas? In Aviva’s case, in a “Digital Garage”: a converted warehouse in Hoxton, London’s fintech hub. It is there, amid the exposed brick and 1950s-style armchairs that chief executive Mark Wilson is known to abandon his tie in favour of a “festival-style wristband”. Staff have been hired from Google and, when the FT photographer visited recently, few felt the need to shave.
OK. So it is easy, and perhaps unfair, to poke fun at honest attempts to overcome the obstacles to long-term financial provision. For too many millennials, these obstacles are — like Aviva chin whiskers — many and growing.
In a recent survey by Facebook, the financial priority for nearly half of its millennial users was debt freedom. For another 20 per cent of the so-called “Generation Rent”, it was home ownership.
It was therefore encouraging, in recent days, to hear of three more practical proposals for helping millennials to save.
At the Labour party conference, Steve McCabe, MP, suggested that tax relief on pension contributions be targeted at “younger people on low incomes”. Two days later, Kate Smith, head of pensions at Aegon, suggested combining student debt repayments with pension saving. Then, former minister Baroness Altmann sought to end the conflicting behavioural incentives set up by pensions and Lifetime Isas for building up house deposits.
Combine these ideas in one big scheme, and you have something more powerful than any app. Imagine if workers aged 18-30 could first channel their employer’s pension contributions, plus their own with tax relief, into either: a five-year debt repayment programme, or a five-year property deposit savings scheme — on the condition that they then make a further five years of equal (or greater) contributions to a workplace pension?
Aegon calculations suggest that pension-style contributions could double the rate of student debt repayment. They would also cut the time currently needed to accumulate a house deposit in a Lifetime or Help to Buy Isa — which Chelsea Financial estimates at three to six years.
If this sounds familiar, it may be because it is an extension of a plan set out on this very page nearly seven years ago. It was suggested to me then by Mark Locke, formerly of Aegon, now of consultancy The Lang Cat. As he pointed out this week, it would still be using government and employer contributions for a responsible financial purpose. All it would require, he suggested, is a lot of fintech know-how. I could not help but notice he has more stubble since our last meeting …
Matthew Vincent is deputy companies editor. email@example.com