Monzo, the UK challenger bank, has been a key player in the fintech space and encouraged wide adoption of Open Banking from Gen Z and Millennials. It recognised consumers’ desire for an intuitive, digital solution that enables them to manage all of their finances in one place - offering account aggregation, categorisation, and credit scoring through their Monzo Plus solution.
After its plans to move into the pensions market went public in 2023, Monzo has announced it will be launching a new pension consolidation solution that finds users’ pension pots and brings them into one fund, accessible through the Monzo app.
The announcement comes as Monzo’s research revealed that 51% of UK adults don’t know how much they have saved for retirement. It asked 2,000 people what would make engaging with their pension easier, and 38 per cent said a process that felt more accessible to manage alongside their everyday finances.
Pensions engagement in the UK
Earlier this year, we conducted our own research into consumer attitudes towards their pension and investment providers. We found that:
36% of 35-44 year olds said too little information from their providers was putting them off adding to their pension or investments
2 in 5 (42%) of all consumers say they don’t find it easy to interact with their providers
4 in 5 (79%) consumers “could save more money” if they had one app to view and manage all their banks accounts and financial products
And this lack of engagement is having a detrimental effect on financial health. Recent research has shown that around 88% of individuals with workplace pensions have at least one pension that remains unclaimed and there is an estimated £26.6bn of lost pension pots in total and nearly 1 million pensioners in the UK are living in poverty.
The power of ‘all in one place’
A holistic approach can lead to better outcomes, and it begins with aggregation. Bringing pension pots together helps people understand their true financial position, and answer important questions like “will I have enough?” or “when can I retire?”. It also helps people make better informed decisions based on the performance of their pensions, both financially and ethically, and explore options such as consolidation.
At Moneyhub we would go one step further and bring other investments such as savings, shares and even property into that view. Quite often people will take a lump sum earlier than or draw down faster than they need to when they have other options open to them.
Monzo’s solution reflects what we are seeing from major players within the pensions industry; pensions are one piece of the puzzle, and need to be understood in the wider context of someone’s financial world.
Providers such as Mercer, Standard Life and Scottish Widows are taking a proactive approach to helping members engage with their pensions and understand what they have, and what they might need for a comfortable retirement. By using Open Finance to position pensions alongside daily spending, savings, investments, properties and all other financial accounts, these firms are increasing engagement and enabling better financial futures for their members.
The future of pensions and Open Finance
Monzo’s announcement came hot on the heels of the King’s Speech (17 July 2024) in which it was announced that the Government will bring forward the Digital Information and Smart Data Bill, as well as a Pensions Scheme Bill.
Paving the way for Open Finance legislation, the Smart Data Bill seeks to set a clear framework for consent-driven data sharing, offering new opportunities for innovation to firms, and improved transparency, products and services to consumers - meaning there’s plenty of scope for further pensions transformation, through pensions dashboards and beyond.
If you’d like to find out more about what Open Finance can do for your business, and your customers, just get in touch →