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The financial metrics of small group pensions

Updated: Jan 5

Small group pensions can be a time-consuming part of the business but also a highly profitable one if managed effectively.  They can be a strong source of revenue and produce new clients for the business long into the future.  It is therefore important to understand the metrics behind small schemes as advisers often carry loss-making schemes, which can easily be improved.


Group pension revenue analysis

On a basic level, group pensions have two types of income, fixed and variable.  The fixed income is the regular fee or commission income that you get each year for being the adviser to the scheme.  This is predominantly fixed, whilst it may fluctuate from time to time with new members, fee increases, etc. 

While variable income is all other income that is derived from the scheme, we like to call this engagement income, as it has a direct correlation with the amount of engagement advisers do with scheme members.


Knowing the fixed/variable income ratio of your schemes gives you insights into how engaged you are with the scheme members and potentially the risk of losing the scheme to another adviser in the future.  If variable income is consistently low, you would have to question the amount of engagement and communication that you have with the scheme members.


Active/deferred ratio

The variable income on a scheme can be further broken down into income from active and deferred members.   Variable income from active members should be growing each year, as advisers build more and more relationships with active members and slowly cross-sell other services to them.

Membership/Revenue split

Communication with active members can be low, due to a range of factors and it is often non-existent when it comes to deferred members. Whilst deferred members have left the scheme, there is still considerable administration and responsibility associated with them, so it is important to be able to maximise the return that you get from schemes with a high deferred membership.


This raises some important questions about your book of group pension business;

·         What is the deferred/active member ratio on your schemes?

·         What is the average variable income from active/deferred members?

·         What strategies do you use to boost these metrics?


A high deferred/active member ratio can often signal a scheme in decline and one that is possibly loss-making for the adviser.  Whereas a scheme with a large number of active members, but low variable revenue per member, often signals poor member engagement.


Member engagement

We know engagement is at the core of getting the metrics right but, (and it’s a big but), advisers have the odds stacked against them in building strong relationships with members.  Here are the 4 reasons why;


1.       Scheme members don’t pick their adviser, they are given one

2.       Advisers tend only to see members once a year at the renewal meetings

3.       HR can be a barrier to contacting the members throughout the year

4.       Advisers give members the login details to some other brand (a pension provider)


Client portals

Advisers in the Australian market experienced the same issues for years and more and more they have turned to branded client portals to ensure that it is their brand that is in front of their clients, they drive the communication, and they control member engagement.


Variable scheme income will increase through targeted member engagement and keeping the adviser's brand in front of the members.  It will also increase variable income from deferred members, if they can also be provided with an adviser’s portal and a strong value proposition as to why they should engage with it.


PensionsVault is the only adviser-branded platform on the market for advisers to actively boost scheme engagement and revenue metrics.  Customized with the adviser's logo, brand colours, and even profile picture, the platform shifts the attention of the scheme member from the pension provider to the adviser, building brand, loyalty, and year-round revenue opportunities.


Contact Karl O Meara for a demonstration.

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