World’s first ‘Retirement Modeller’ calculates pension income from current lifestyle

In the UK, more than two million pensioners live in poverty and millions more are fated to join them because up to one in five people in their twenties are failing to save for retirement. 

Now Moneyhub, the market-leading Open Finance data, intelligence, and payments platform, has launched a new “Lifestyle Retirement Modeller” which shows people how much income their pension will provide in old age and encourages them to start saving now. This feature is available to Moneyhub enterprise clients, who can customise it to their own needs.

Currently, many British people are failing to pay attention to their pensions, with a survey by the Financial Conduct Authority (FCA) finding that just 12% of women and 26% of men are “highly engaged” with their pension, whilst 31% do not even know the “approximate size” of their retirement savings pot.  

The new Modeller is designed to tackle this problem. It uses artificial intelligence to carry out a holistic analysis of users’ current cash flows and then uses this information to predict the lifestyle they will have after retiring from work.  

This future projection can then be the basis for making changes to saving and spending habits to lay the foundations for better financial wellbeing later in life. It also uses “goal-seeking” algorithms which present options available to the individual which will allow them to achieve their desired outcome.

Moneyhub says that is „the first and only platform to apply the power of Open Finance to the retirement market and improve engagement with pensions”. 

During pre-release testing, the Lifestyle Retirement Modeller was shown to dramatically increase pension engagement, transforming people’s understanding of their current retirement trajectory and showing what they can do to improve the situation.

By showing day-to-day banking activities alongside long-term savings and investments, people can compare their lifestyle today against their future financial situation and gain an understanding of the positive long-term consequences of good decisions.

The Moneyhub Lifestyle Retirement Modeller can be coupled with nudge technology and the automated sweeping of cash. The Modeller is designed to trigger action and engagement, motivating people to pay more attention to their pensions, as well as encouraging them to make payments and save larger sums of money for retirement.

Dan Scholey, Moneyhub Chief Operating Officer, said: “Pensions are one of the most important and impactful financial aspects of people’s lives – yet they often receive the least attention. 

“We know that younger people find it very difficult to plan for retirement, which can seem a long way off.

“By showing people the level of comfort – or discomfort – they can expect after stopping work, Moneyhub can encourage them to make positive financial decisions which have life-changing benefits.”

The Office of National Statistics recently announced that the consumer prices index (CPI), a measure of the cost of living, has hit 3.1%, which means that pension payments will rise by the same amount. From April 2022, pensioners in the UK will receive £5.50 extra a week, amounting to an extra £289.50 which will bring retired people’s income up to £9,628.50 a year – barely enough to get by. 

The statistic on pension engagement makes for concerning reading. Just one in 10 pension members is connected with their provider through online platforms, even though half of Millennials and 62% of Generation Z would like to use a digital pensions portal linked to their bank account, according to a PWC survey. The pandemic has also eroded many workers’ savings, leaving them with less money for the future and forcing them to delay plans for retirement.  

Moneyhub allows users to take control of all their assets, ranging from current and savings accounts to wider investments and property, as well as their liabilities in terms of loans, mortgages and upcoming tax bills. 

The platform features the most data links of any aggregation provider in the UK, allowing users to easily link up credit cards, loans, bank accounts, mortgages, investments and pensions from more than 200 UK financial institutions.

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Moneyhub is the leading Open Banking and Open Finance platform that uses the power of data, intelligence and payments to enhance the lifetime financial wellness of people, their communities and their businesses. Moneyhub’s APIs and white label solutions help businesses – both within and outside of financial services – drive customer engagement through hyper-personalised experiences.

The company takes consumer data security seriously and has been instrumental in the roll-out of Open Banking from its beginning. Leading the way in Open Finance since 2014, Moneyhub is authorised as AISP and PISP by the FCA, ISO-27001 certified, co-founder of FDATA and works on the Pension Dashboard and TISA Open Savings, Investment and Pension steering committees to put the power of data into the hands of those who own it: the consumer.