Put your pension in your pocket with a clever solution that puts you in control

If you think you need to start a pension but you’re too busy, or that it’s too complicated, think again. The new pension product from KBC is designed to put you in control, says John Gethin, branch manager at KBC Life and Pensions.

Like everything else the bank does, it’s a little bit different. For a start, “It’s 100 per cent end-to-end digital,” he explains.

The KBC Lifestyle PRSA (Personal Retirement Savings Account) is a long-term pension plan that allows you to save for your retirement. It’s the result of a huge amount of research into pensions and why more people don’t engage with them.

“What all the research shows is that many people don’t feel they understand pensions. But it is actually easy – all it is, is saving for the future. That’s it,” Gethin says.

The research also reveals why people feel they don’t understand pensions. “When you ask them why don’t they engage with pensions, they say things like, ‘Because I don’t know anything about investments’. But that’s a different conversation,” he explains.

The fact-finding the team undertook got them thinking about how they could take away this fear of the unknown, and turn pensions into something rather more familiar. The answer, they realised, was at their fingertips, or rather ­– their thumb.

Put your pension in your pocket

KBC has developed a pension plan which people can connect with directly through the KBC Mobile app on their smartphone.

“We wanted to make it very simple and engaging. Because the mobile app already has all our customers’ info, it also means we don’t have to ask them the same 20 questions every time we are in touch,” Gethin says.

In fact, existing customers can sign up for a pension in just four steps.

“We don’t just bring you through the journey, we put you in the driving seat, that’s the difference,” he says.

Simply set the income goal you’d like to aim for in retirement, and away you go. “We call it thumb-powered pensions. If you think about how people engage with their banking apps, it’s very frequently. We wanted to make our pension that accessible too. Check it as much as you want, put your money in and track how you’re doing. It’s putting your pension in your pocket.”

Get too technical about pensions and people’s eyes glaze over, which prevents us from taking an action that deep down, we know we need to.

At a common sense level, everybody knows saving for the future is important, Gethin points out. For the issues you don’t understand, and want to find out more about, KBC has an online education centre, with easy to understand content such as YouTube videos. Or you can just tap out to talk to a member of the bank’s contact centre team.

Your pension your way

With KBC’s pension, you decide you’d like to have, say, €1,000 a month in retirement, and the app tells you exactly how much you’ll need to put away each month, at your age, to do that.

With the KBC Lifestyle PRSA, there is no investment discussion required because it has a built-in investment strategy that is optimised for you, all the way to your retirement. “The only decision you have to make is that you are going to set up a pension, securing your future” he says.

A KBC PRSA means no more messy pensions drawer, filled with confusing bits of paper, either. “It’s all in the app, with a dashboard that shows you what’s happening with your savings. That’s where the magic really happens because you are in complete control,” Gethin says.

If the washing machine breaks down and you need to buy a new one, just pause your contribution

If things are going well one month you can put in a bit extra. Or, “If the washing machine breaks down and you need to buy a new one, just pause your contribution”.

According to the rules, all PRSAs let you chop and change as life dictates. “But previously you’d have to write and notify your pension provider, so effectively that means waiting for a response. With our app you just make the change. Simple,” he points out.

If you do need paper, you can have it. “At the moment a lot of self-employed people will be sorting their Pay and File tax returns, and saying okay, I need to put a lump sum into my pension to offset my tax for this year. With our app, one hit and it’s done. Need to email or print off a PDF for your accountant? No problem. Done.”

This month, KBC has also launched the Lifestyle Extra PRSA, designed for customers who want more investment choice in their retirement savings. Not just content with a ‘me too’ approach, KBC has included a unique risk profiler in the product which doesn’t just assess a customer’s attitude to risk, but also takes into account how they feel about loss.

This is then matched with an investment portfolio centred on the customer from the KBC Asset Management ExpertEase fund range. “We wanted to ensure that the latest thinking in multi-signal and adaptive investment portfolios would be available and uniquely linked to our customers’ own risk profile in an easy to understand way – ExpertEase does this,” Gethin says.

Making pensions easy

Take-up has been impressive. “So far, 57 per cent of our customers have made some change to their plan either increasing, decreasing or pausing their contributions or adding a once-off payment,” Gethin says.

Most people, unless they are obliged to by their employer, don’t really start engaging with pensions until they are in their late 30s.

“The research shows that affordability isn’t the biggest blockage, it’s the feeling that ‘I don’t have the time’ or ‘it’s really complicated’ or ‘pensions are difficult to manage’.  With our solutions you’re engaging with your pension from your sofa,” he says.

The current State Pension is €12,960, or 34 per cent of the average industrial wage. If you earn €40,000 or €50,000, “that’s quite a drop”, he says.

Your pension helps protect you from financial vulnerability in the future. His encouragement is that any time is a good time to start, but don’t overburden yourself.

The biggest regret we hear from people is that they didn't engage with retirement saving sooner

“All through people’s lives there are significant moments, such as buying a house, getting that first job, finding a partner, having children. Starting a pension is about asking yourself what kind of retirement you would like to enjoy,” he says.

“The biggest regret we hear from people is that they didn’t engage with retirement saving sooner. Most of us are probably going to live at least 20 years after retirement, so when we think about the plans we have for our future, we need to ask ourselves will we have the money to meet them.”

At this time of year we hear a lot about the tax advantages of taking out a pension, and rightly so, but it’s not the real story either, he points out.

“Tax relief is important but you shouldn’t just be setting up a pension for tax relief. Retirement planning is about you, which is why our pension is tailored to you,” Gethin says.

How a user uses it

When it comes to new technology, Xiaoyi Li, from Dandong in China, is an avowed early adopter. “I like new trends,” he explains.

Li came to Ireland from what he calls his “quite tiny” home city of Dangong, with a population of two million, in 2002, having trained as an English teacher. His real love, though, was technology.

He studied computer science in Ireland and changed tracks to pursue a successful career as a software engineer. Today he works for WorkHuman, an award winning social recognition and continuous performance management tool.

Li became a KBC customer in 2013, attracted by its innovative, digital-first approach to banking. “I thought it was awesome,” he says.

“The focus is on digital and I’m from a background that says we should respect nature and not ‘do’ paper. For me, I like that it is digital and I can control my finances in the mobile app. I use it every day.”

That’s precisely why as soon as KBC launched its in-app personal pension product earlier this summer, he signed up.

“I like something new but I also like to invest for the future,” he explains.  “The on-boarding process was really smooth, a couple of details and everything’s done. There is a lot of security behind it and it’s a better user experience.”

[ www.kbc.ie ]

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WARNING: The value of your investment may go down as well as up.
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KBC Bank Ireland plc is regulated by the Central Bank of Ireland. KBC Bank Ireland plc is a tied agent of KBC Insurance NV trading as KBC Life and Pensions for the provision of Personal Retirement Savings Accounts. KBC Insurance NV trading as KBC Life and Pensions is authorised by the National Bank of Belgium in Belgium and is regulated by the Central Bank of Ireland for conduct of business rules.