This article, the second in a two-part series, discusses the many ways insurers and banks are assisting people with planning for retirement.
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Most employees no longer have one employer for life; instead, they find themselves working for numerous companies throughout their career.
When it comes to retirement, this job hopping has produced a need for tools and resources to track retirement savings and created an opportunity for banks and insurers to provide those resources. At the same time, insurers are developing life insurance products designed to provide an income for life, with some offering health benefits and riders for long-term care.
Banks and insurers, with the help of financial advisers, have developed apps and dashboards to help people plan and 鈥渧isualize鈥 their retirement.
Recent launches in the US include Voya Financial鈥檚 employee dashboard, which provides access to retirement plans and health savings accounts all in one place. The dashboard also provides data-driven, personalized insights to help inform employees about their complete health and financial picture. Mecurity and MetLife launched the MetLife Universal Digital Retirement Platform, an education, planning, and annuity-purchasing tool. It seamlessly and securely connects to existing employment benefits and TPA recordkeeping systems. Meanwhile, the Voyant AdviserGO platform has three simple simulations for longevity risk, long-term care, and disability. With the click of a button, advisers can easily illustrate complex solutions.
In Canada, BMO has a wide range of innovative digital tools that promote financial literacy. These include:
In Singapore, DBS Bank has incorporated a new feature 鈥 Your CPF 鈥 in its digibank app to give users a clearer picture of their Central Provident Fund (CPF) savings. The new tool will enable CPF members to benchmark their retirement savings against the projected CPF retirement sums for their age cohort, allowing them to take steps to close savings gaps.
In the UK, Scottish Widows has launched a new Retirement Matrix to help customers engage in better and more informed conversations. On a simple, 3D cube, the tool maps all current and potential retirement products against retirement income goals.
Interestingly, while customers indicated they wanted a product that provided a guaranteed income for life, only a few are currently purchasing an annuity product.
Apps also help with retirement readiness. Recent examples include:
Insurers and banks have also teamed with associations, to help customers locate the pension savings they might have accumulated over a lifetime of working.
In Canada, the National Institute on Aging has partnered with Sun Life to examine the growing problem of missing members. Some plan administrators lose contact information for their members. This is due to members moving, changing banks, passing away or other causes. This can prevent people from receiving pension payments or key communications about their pensions. Many Canadians hold multiple jobs and build pension savings in different plans over their careers, thus increasing their likelihood of becoming a missing member.
This leaves millions of dollars in workplace pension funds untouched.
In the UK, Aviva launched the first 鈥淔ind and Combine鈥 pension tracing, checking, and consolidation service. This service simplifies consolidation by bringing all information together in one easy-to-read dashboard so the customer can choose which pension (if any) to transfer. Lloyds offers the Ready-Made Pension Service, allowing customers to combine up to 10 pension amounts and open a new pension with Scottish Widows.
Retirement savings plans are one of the most valued parts of an employee鈥檚 benefits package. Globally, such plans are among the top reasons employees remain at their jobs.
Employers should consider enhancing their financial wellness offerings to help workers understand retirement living. Employers are well-positioned to offer robust guidance that may alleviate retirement worries and help workers feel more prepared for the unexpected. Such offerings might include broader types of benefits that assist with debt paydown, supplemental income, and ways to deal with student debt.
John Hancock, a unit of Toronto-based Manulife, announced the launch of a new Premier Benefit Indexed Universal Life individual product in the voluntary benefit employer space. It offers a streamlined digital process, and employees can choose to enhance their coverage with optional rider coverage for long-term care. All policies will be issued a Vitality Plus rider, which offers savings and rewards for everyday activities people can do to live longer, healthier, and better lives.
One of retirees鈥 greatest fears is running out of money or outliving their savings. Many would invest in a product that gives them a guaranteed income for life. Retirees also tend to forget to factor in the need for long-term care, and life insurance plans are now offering an add-on, long-term care rider. Transamerica has introduced a long-term care rider for its universal life insurance, providing a flexible solution for Americans approaching retirement. The rider allows policyholders to access death benefits early to pay for long-term care expenses.
In the US, BlackRock launched its Lifepath Paycheck solution. To help education plan participants, BlackRock developed MyLifePath, a digital experience that shows how contributions can translate into retirement income. Its LifePath Paycheck solution takes the same approach and provides access to a guaranteed income through a target-date fund, an investment strategy that automatically adjusts to a specified retirement year.
In Asia, retirement savings plans are popular products. Recent product launches in India include:
Some of those plans offer a choice between receiving a regular income to one that increases every year, as well as partial withdrawals. They also provide flexibility in premium paying and income terms.
In the Philippines, Pru Life UK introduced PruLifetime Income, a product that provides a 5% guaranteed payout for life. In Hong Kong, HSBC Life is introducing a brand-new savings plan 鈥 the HSBC Eminent Goal Multi-Currency Insurance Plan 鈥 which provides up to nine currency options, catering to customers' international needs across education and retirement planning.
These savings products can also offer additional services, such as complimentary health checkups, life insurance, and death benefits. In Asia, MetLife has launched 360 Future, which helps customers prepare for retirement by combining savings, insurance, health, and wealth services. Retirable has partnered with eHealth to provide comprehensive retirement planning expertise with 鈥渢ailored鈥 Medicare and health insurance solutions.
A reverse mortgage, or equity release, is a loan designed for homeowners 55 years of age and older. It is secured by the equity in a home, which is the portion of the home鈥檚 debt-free value and allows homeowners to obtain cash without having to sell their home.
In the UK, equity release plans are offered by insurers. LV=, in partnership with the Age Partnership, will advise customers on the most suitable products available. Two of LV= products are Lifetime Mortgage Drawdown+ and Lump Sum+. Royal London also offers several equity release products, including Core Standard, Core Premier, and Principal. Saga Mortgages follows the recent launch of Saga Legal and the Saga Savings Platform, a suite of new money products, furthering Saga鈥檚 strategic ambition to become the super brand for people in the U.K.
In Canada, HomeEquity Bank and Equitable Bank are the only banks that offer reverse mortgages directly to homeowners over the age of 55. A newcomer is Bloom Finance, which offers an innovative Bloom Prepaid Mastercard that allows people to access their funds locked in home equity. Portfolio+ Inc launched the Portfolio+ reverse mortgage solution designed to empower lenders to redefine retirement planning for their clients by allowing homeowners aged 55 and older to unlock the tax-free equity in their homes.
In Asia, FWD recently launched Life Gala, an eligible life insurance plan under the Policy Reverse Mortgage Programme, providing stable cashflow to enhance quality of life during retirement. One feature is the Life Celebration Booster Option, which empowers the insured to amplify coverage at various important life milestones. This allows the insurance policy to be converted into a stable, lifelong cashflow.
Insurers worldwide are providing a range products and services to help customers become retirement ready. The insurance industry plays an important role in promoting lifelong financial security by continuing to produce products that cater to individual needs.
Part 1 of this article series examines how insurers are helping people plan for their retirement. It discusses designing applications, dashboards, and group life and individual life plans with guaranteed income for life. It also highlights the need for flexibility in product design and the importance of incorporating value-added services, including health components and options for long-term care.
