Problems ahead for pensions initiative
IT looks like the much-debated Pensions Dashboard is back on again as the Government has launched a consultation on it.
For months it has seemed the Dashboard – an online initiative that will let people see all of their retirement savings in one place, so they can better plan for retirement – was set for the scrapheap.
On the one hand this is good news as something desperately needs to be done to help simplify the complex pensions system and make it more accessible for everyone. However, there are major concerns from pensions experts and those in the industry that the Government must ensure they get this right.
It must be totally clear from the start exactly what the Dashboard does and doesn’t include, to avoid adding yet more confusion to the industry.
People find pensions bamboozling thanks in part to constant changes to the state pension, and the pension freedoms allowing more flexible access to workplace and private pension savings.
Then add in the fact that people don’t have a job for life any more and may have numerous workplace pension pots that are easy to lose track of as people forget what savings they do have.
Tom Selby, senior analyst at investment firm AJ Bell, said: “The fact Number 10 has thrown its weight behind plans can only be a good thing, while confirmation state pension data will be available is a step in the right direction.
“However, without legislation in place requiring all pension schemes to participate, the early rollout will be limited in the extreme.
“The Government needs to be clear with people about what the Dashboard they see at launch shows them and what will be missing.”
Former pensions minister Baroness Ros Altmann says it’s great to see the Pensions Dashboard back on the agenda but there are lots of hurdles to overcome to ensure it works well for savers, from guaranteeing records are accurate to the huge costs in converting everything to electronic format.
Ros said: “I welcome the news that the Prime Minister has given official endorsement of the development of Pensions Dashboards, which can help people keep track of all their pensions in one place. Having a proper picture of how much your pension savings are worth and what you might receive in retirement can be an invaluable tool in planning for later life.
“But there are many hurdles to overcome before the ideal of a full-functioning dashboard can be realised.”
Ros says one of the key issues is that older pensions are not held in electronic format, so it will take years and cost huge sums to add them all to a dashboard.
Ros added: “There is a danger the whole Pensions Dashboard project could be derailed and indefinitely delayed if the industry or the Government requires all legacy pensions to be put onto the system from day one. This may be better handled by mandating a standard format for written statements for older pensions.
“It would be more realistic to at least get the Dashboard started with auto enrolment records and the State Pension. This would be the greatest help to younger generations who will not normally have lots of older pensions.”
Hurdles include ensuring records are accurate and the huge cost of converting everything to new format