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Money & Rights

What will the Pensions Dashboard mean for you?

As the government presses ahead with its Pensions Dashboard scheme, Marianne Curphey explains how the initiative will work

An estimated £400m is sitting in lost pensions, waiting to be claimed by people who have saved hard over their working life. Many pensions have gone astray because people have lost contact with old employers, or firms have merged or moved.

Now, an initiative between the Government and the pensions industry will not only help you find these lost savings, it will also enable you to view all your retirement schemes in one place.

In time, it should have your State pension and all your workplace, employer or private schemes in a single online site, known as the Pensions Dashboard. It will include most final salary (defined benefit) schemes, most investment-based (defined contribution) schemes, all your private pensions and any State pension.

The Pensions Dashboard Prototype Project was launched in September 2016 and for a while it looked as though the whole project might be scrapped. Now, however, it is being revived, and should be available later this year. To start with, the State pension won’t be included in the overview.

How it works

There is likely to be more than one Pensions Dashboard – and it will be available through advice services, banks and employers. You will also be able to access it via an app on your phone.

You will enter some details to confirm your identity, including your National Insurance number, and the Pensions Dashboard will look for pension pots that match your details. You will be able to see the most recent valuation for each, and an amalgamated estimate of your total current pension income. It should also help trace lost pensions in your name and encourage people still working to save more for their retirement.

The Pensions Dashboard prototype has been developed with the help of six technology firms. It is supported by the financial services industry and is designed to help people take a more proactive role managing their money in retirement. It will be fully funded by the pension industry, rather than the Government.

Financial companies hope it will spur people into saving more, managing their money better once they have retired, and taking financial advice to help them with long-term cashflow in retirement.

When will it start?

It will take time for it to be fully operational, because for it to work effectively, all companies need to sign up. Unless the Government makes it mandatory to take part, uptake might be slow.

“To get the dashboard to work, all the insurance companies will need to agree to be a part of it,” says Jamie Smith-Thompson, managing director of Portafina. “This will likely be staggered. Some pension companies are already tech-savvy, and will come on board quickly, but some are still archaic, using old systems and databases.”

“It may take a pension company using older systems years to develop the technology needed to be a part of the dashboard. If your pension is with one of these companies, you won’t benefit from the dashboard for some time.”

Peter Bradshaw, director of Selectapension, described the Pensions Dashboard as a centralised ‘pension finder’ which will interact with pension providers to search for existing policies, some of which will be inactive. “The advantages are that users will have a fuller understanding and expectation of retirement income,” he says.

How will it help?

The Consumers Association has called the Pensions Dashboard ground-breaking.

Gareth Shaw, Which? money expert, said: “The dashboard could be a game-changer for consumers who have struggled for too long with a complex, fragmented pensions system.”

Financial advisers say it will help with one of the major barriers stopping advisers and consumers putting comprehensive financial plans in place – collecting information and interpreting it.

A simple solution

As many retirees know, the pensions system is complex and many of us rely on a variety of sources of income to fund retirement.

Shaun Gomm, commercial director of user experience (UX) agency Sigma, which helped draw up a Pensions Dashboard prototype, says the pension system in the UK is one of the most complex to navigate in the world.

People have, on average, 11 different pension pots over the course of their lifetime, making it a near-impossible task to keep track of them.

“It seems likely the Government will need to commit to legislation ensuring that all providers (at least 95 per cent) make their data available to the system,” he says. The good news is that pension dashboards have the potential to revolutionise the way people think, feel and access information about their pension savings, says Adrian Boulding, director of policy at NOW: Pensions.

“Research has found more than three-quarters of pension savers are likely to use an online secure site that allows them to view all their pensions, including the State pension, in one place,” he says. “Nearly two-thirds said this would help them manage retirement savings better.”

Although the State pension won’t be included straightaway, it is important to make sure it is there in the long run, he says. “For most people this will make up the lion’s share of their pension savings and it’s good to see the Government commit to integrating the State pension into the dashboard.

“But the technology needs to be future-proofed. Simply providing a window to look in and see what’s there isn’t enough. Savers want to be able to do more, and enabling them to do so could help improve their quality of life when they retire.”

"It needs to be clear and flexible"

Tom Selby, senior analyst at AJ Bell, says with instant online banking, people have high expectations of financial companies. “In an ideal world, pensions would not just be presented to people as pots of money but also converted into retirement income estimates,” he says.

Another thing which savers might take issue with is the cost of their plan, in terms of annual and other charges.

“It would also be useful if information on costs and charges was made visible in a clear and prominent way, putting clear blue water between those offering value for money and those charging savers through the nose.”

“The Pensions Dashboard needs to be simple, jargon-free and graphically engaging,” says Ivan Laws, Pensions Director at Ensign.

“In order to be effective, it needs to hold meaningful data and projections from all pension schemes, and data provision by those schemes must be mandatory. The figures need to be adjusted to account for inflation so that values at a future retirement date look realistic.”

What about higher costs?

Not everyone is giving the Pensions Dashboard an enthusiastic welcome, however. Stephen Sumner, director of Explore Wealth Management, says the system is aimed at people who haven’t yet retired, to help them obtain information about the current value of their pension pots and make it easier to track down dormant pensions.

“In my experience people are very aware as to whether or not they ‘have a pension’ when they eventually retire,” he says. “However, the vast majority of the people I have seen over the years don’t possess any information about what income they will receive at retirement age or even if they will have a lump sum payment of any kind. Nor do people know how much their State pension is likely to be.”

“This is not down to a lack of interest but more to do with the failure of pension providers to provide information in a user-friendly format, and also of the Government to communicate such information.”

He fears the Pensions Dashboard will lead to pension providers passing on the cost of providing this information to consumers in the form of higher annual management costs, which will effectively reduce the end-value of their pension pots when they do retire. “I’m also not convinced there is a huge demand for such a service,” he says.

What happens if I divorce?

The Pensions Dashboard will make it easier to obtain the total value of a pension pot but there is still some way to go before it will give the clarity that people need as they go through a divorce.

If you are divorced, or in the process of separating, it is important to look at State pension entitlements and benefits as well as your private pension. Alistair Wilson, head of retail platform strategy at Zurich, said: “Too many people do not know how much money they have in their pension pot, let alone what their spouse has. If a couple divorce, it can leave the individuals without clarity of all assets that could be included within the financial settlement and at risk of losing out on a sum that could be vital to their financial security.”

He said this was a problem because Zurich’s research found adults who were divorced or separated were twice as likely to have no savings or investments than those who were married.

Top things savers want Pension Dashboards to be able to do:
  • 37 percent want to be able to pay more money into their pension
  • 33 percent want to be able to update their contact details for all pension providers
  • 32 percent want to see if they are on track with their pension savings against a benchmark or target
  • 32 percent want to be able to transfer/consolidate pension pots
  • 32 percent want to access their annual benefit statement
  • 28 percent access to guidance
Find out more

It's not clear exactly when the Pensions Dashboard will be fully functioning, so if you do have a lost pension it is worth finding it now, rather than waiting. For now, the best place to start your search is the government's Pensions Tracing Service. This is an online and phone service.

  • Pension Tracing Service, tel: 0800 731 0193, from outside the UK, tel: +44 (0)191 215 4491, website: www.gov.uk/find-pension-contact-details
  • If you think you may have lost track of a pension due to a merger between schemes or companies, the Association of British Insurers (ABI) provides an online Register of Consolidations. This site can help ypu find out which company is now responsible for pension schemes which have been transferred to different firms. It's important to keep your personal details up-to-date with all of your pension providers- for example, if you move house. 

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