Yvonne Braun, Director of Policy, Long-term Savings and Protection, answers questions on how customers can be better supported through – and beyond – the Covid-19 crisis
Recent data on the actions of pensions savers during the pandemic surprised many people. Can you suggest why the anticipated draw on savings didn’t happen?
All the market data we’ve seen from our members suggests savers hit the pause button during the first lockdown, when we saw a real drop-off in terms of people accessing their pensions. This might be because of the unprecedented nature of the crisis, and pensions were not at the forefront of people’s minds or because of fears around the impact of the crisis on their savings.
However, new figures published in November suggest an uptick in people taking new products and withdrawals, albeit at lower levels than normal for this time of year. It’s good if people aren’t making snap decisions in response to short-term pressures. However, the economic difficulties are only just beginning, so we may see more people accessing pension pots through 2021 simply because they have to.
During this period, the ABI and our members have a significant role to play in giving the best possible support to ensure they do this safely.
What will be the long-term impacts of the pandemic on savings plans?
We’ve seen some encouraging evidence from our work with Britain Thinks that suggests people are considering pensions, savings and protection more carefully than ever, perhaps because we have all had to consider our own mortality during this time. It’s too soon to say whether it will last, but there is an opportunity right now for the sector to demonstrate why insurance and long-term savings can play a positive role by providing peace of mind.
I think the crisis has underlined how pivotal the ABI can be in amplifying positive messages, constantly asking questions, helping members to share best practice, and leading them to be a positive force in people’s lives and society.
What was your experience of working on the Covid-19 Support Fund?
This was an amazing illustration of what can be achieved when the sector comes together. The whole gamut of the insurance and long-term savings industry acted as one to raise £83.9m. The fund received another £20m from the government through the work we did with the Charities Aid Foundation and we’ve been working with partner charities to get this funding on the ground, to people who desperately need it, as quickly as possible The Fund’s governance committee has now allocated another tranche of money to more future-focused activity, to address some of the negative outcomes of the crisis, such as domestic abuse and mental health issues. The intention is to rebuild and create sustainable structures, and I hope it will leave an important legacy for our sector.
How have death claim pay-outs been impacted by the pandemic?
Sadly, the pandemic has taken a huge toll in terms of human life and this manifests in a significant number of claims on life insurance policies. As of June, the industry had paid £90m for people who died from Covid-19.
In 2021, we will again be looking at the overall contribution insurers have made to families affected by Covid. I think we have a chance to remind customers that life insurance can be a positive thing that can provide stability during very difficult times.
How has the ‘Pensions Dashboard Project’ been developing?
We’ve advocated for the development of pensions dashboards to enable customers to access their pension information in one place. They should help people take more ownership over their savings, giving them greater piece of mind.
The ABI believes any dashboard should be regulated by the FCA, but also that third parties could offer their own dashboards on top of any provided by the Money and Pension Service. We believe that more customers will use such services if we put the information in places they already frequent.
The dashboard proposal is going through parliament under the Pension Schemes Bill, and, providing it passes and receives Royal Assent, will be phenomenally helpful. Other provisions in the bill should also help to protect people against scams, an area of great interest to us.
How has gender inequality in pensions savings been affected by the pandemic?
Gender disparity in pensions savings reflects both the gender pay gap and employment law that pushes women towards both care-giving roles in the home, and part-time work, which results in smaller pensions. The pandemic has put this trend on steroids because the sectors that have been hit hardest, such as retail and hospitality, are dominated by women and are low-paid.
In order to start addressing this, we need to examine how pension contributions are calculated under automatic enrolment. Again, the system is geared towards full-time workers and is not particularly helpful for many women.
How has the diversity agenda progressed this year?
Although we’re a long way from true equality, women today are better represented in senior roles. We’re seeing a similar progression for Black, Asian and Minority Ethnic individuals, partly thanks to the Black Lives Matter movement. At our ‘Time for Change’ event in October, we announced the ABI and 32 of its members were signing a charter that commits them to appointing someone at executive level responsible for driving action in this area. Elsewhere, we’ve supported the ‘10,000 Black Interns’ initiative. These issues are definitely going up the agenda, and rightly so, because so much potential is being wasted at the moment among minority groups and this needs to change.