Clear view of pensions
FIVE-MINUTE GUIDE TO... LAUNCHING THE MAPS DASHBOARD
ONE of the biggest challenges savers face when building money for retirement is getting a clear view of where their various pension funds are held and how much they are worth in total.
People can end up with multiple workplace schemes from former employers as they move about during their career, as well as personal and stakeholder pensions.
It can be hard to work out exactly where you stand and how much more you need to afford a comfortable retirement.
Another danger is that pension schemes will get forgotten, as savers have lost track of an estimated 1.6 million schemes worth £20billion.
For years, the Government has been pushing to create a “pensions dashboard”, which would allow savers to see their various pots at a glance, including the state pension.
Originally slated for 2017, the dashboard still has not been finalised.
Last week it moved another step closer, as the House of Lords passed the
Pension Schemes Bill 2020, which contains further details of the dashboard, plus other pensions safeguarding measures.
Pensions expert and campaigner Ros Altmann said the dashboard will help consumers plan their retirement income with fuller information about the money they have saved so far.
She also supported moves to ban private companies from setting up their own commercial rivals until the publicly run
Money and Pensions Service (MAPS) dashboard has been running for a year.
Altmann said the big fear was that a privately-run pensions dashboard showing all your previous schemes might also include a “Consolidate Now” button:
“This could potentially transfer all your past pensions to that commercial company, which may not be in your best interests.”
New proposals will also prevent private dashboards from selling other financial products to unsuspecting consumers, in a bid to prevent yet another pension mis-selling scandal.
Altmann said the pensions dashboard will contain sensitive personal data on pension assets worth hundreds of billions of pounds: “Great care is needed because people’s pensions are a hugely valuable asset, possibly even worth more than your home.”
Kate Smith, head of pensions at Aegon, called for all commercial dashboards to be regulated and include a ban on financial transactions, to prevent mis-selling and thwart the growing number of pension scammers: “They should include the ability to stop transfers when suspicious activity is triggered by warning systems.”
Many will still want to consolidate their old pensions to make them easier to manage. Smith added: “Modern schemes tend to have lower charges and better tools to help you plan for retirement.”
New rules will also direct savers to MAPS for free, unbiased guidance before transferring a pension, to avoid scams and understand the costs as well as benefits of consolidating.
Smith said the Bill still has to pass the House of Commons, so further patience is required: “The sooner pension dashboards are up and running, the better.”
The Bill will also give the Pensions Regulator stronger powers to tackle rogue employers, including criminal and financial penalties, to reduce the danger of another BHS or Carillion scandal.