Whilst many people find it hard to commit to making a decent level of saving to a pension scheme, no shortage of others seem to have difficulty in remembering they have already done so!
According to recent Association of British Insurers (ABI) research, around 1.6 million pension pots, worth some £19.4 billion, remain unclaimed by owners who have either lost track of them or forgotten about them.¹
In the old days, when jobs were for life, this wasn’t an issue. But the average British employee may have up to 11 different jobs in their lifetime.²
Well before the current health crisis, the Department for Work and Pensions (DWP) had estimated that workers will have lost track of around 50 million pension pots by 2050.² Yet employment seems destined to become even more transient during a post-COVID world.
So wouldn’t it be wonderful if everyone had access to a central source that could provide them with details of all the pensions they had acquired, including the State Pension?
With clients regularly enquiring about the latest state of play, it is hard to forget that that the Government was hoping to have such a facility by now!
A new Pensions Dashboard, that would enable people to see a snapshot of all their pension arrangements online (free of charge and via a portal of their choice), had been earmarked for introduction in 2019.
In a single consolidated view, it was going to be able to detail defined benefit and defined contribution company schemes, personal pensions and the State Pension. Consumers would therefore be able to identify all their pension savings and take a holistic approach that should help them decide when they could retire and what financial decisions needed taking.
Additionally, this would, hopefully, mean that employees would be motivated to increase pension contributions and be more inclined to take a proactive role in managing their retirement.
They should also gain a clearer grasp of the need for financial advice, and independent financial advisers (IFAs) would be better placed to provide this as a result of being fully aware of their clients’ overall pension assets.
But, as the silence on the development of this Holy Grail has been deafening, we thought a brief progress update might be helpful.
Technically the Pensions Dashboard project is still alive. For example, as recently as October 12th this year its programme team announced the formation of the Usability Working Group, a forum for facilitating discussion and sharing insight and best practice on all things related to user needs and usability.³
This followed in the footsteps of the Data Working Group, set up earlier this year to get a better understanding of the data challenges involved.³
But, in truth, momentum has been slowing during the previous couple of years. In particular, the Government’s April 2019 response to its December 2018 Pensions Dashboards Consultation seemed to demonstrate more questions than answers.
One major stumbling block is that – at least for the initial versions – dashboard systems cannot keep a record of the information they obtain. This effectively makes them useless for an advice or guidance process.
Another big issue is that trustees of defined benefit pension schemes, amongst others, have been guilty of obstructing progress, placing their personal interests ahead of those they are supposed to be representing.
With the Government preoccupied with matters such as COVID-19 and Brexit, no-one should therefore be holding their breath.
Indeed, some experts regard recent announcements merely as lip service and are not expecting the Pensions Dashboard to ever come to fruition. But all is not necessarily lost, because we could end up with an even broader scheme instead.
The Financial Conduct Authority’s (FCA) 2019/20 Business Plan contained a commitment to progress Open Finance, which could digitally enable all areas of personal finance as opposed to just pensions. So, we could see a dashboard that can detail all someone’s savings and borrowings.
Sources
¹ www.abi.org.uk
² www.gov.uk
³ www.pensionsdashboardsprogramme.org.uk
Content correct at the time of writing and is intended for general information only and should not be construed as advice.