Director Policy & Advocacy, PLSA
How many of us really know what we have in our pension pots? Well, pensions dashboards will soon make it much easier to find out.
What is a pensions dashboard?
Pension dashboards will transform the experience of pension saving by enabling savers to see the overall value of all their different pension entitlements, including the State Pension, online and in a single place.
On average people have over six jobs during the course of their lifetime and, thanks to the very successful policy of automatically enrolling most people into a workplace pension, with each employer they are likely to have a separate workplace pension. Not surprisingly, many people struggle to keep track of their pensions with the result that they often do not know how many pensions they have or much money they have saved.
That’s why the Pensions and Lifetime Savings Assoication (PLSA) is a firm supporter of pensions dashboards.
What challenges lie ahead?
The challenge ahead is the creation of the “financial plumbing” that will connect the many thousands of pension schemes in the UK with the pension saver. Following a project led by the pensions sector a few years ago, Guy Opperman, the Minister for Pensions and Financial Inclusion, has championed the project in Westminster and Whitehall.
Once the “financial plumbing” is established, it will be necessary to ensure that the data about everyone’s pension savings is accurate and comparable. This sounds like a straightforward task but currently pension schemes use different ways of estimating future pension income, depending on a wide variety of assumptions such as the investments chosen, how long people will live and how a person will draw their pension.
Fortunately, the Money and Pensions Services’ Pensions Dashboards Programme has a plan to iron out these sorts of issues. Currently, it looks like savers will be able to use dashboards from 2024 or 2025.
Currently pension schemes use different ways of estimating future pension income, depending on a wide variety of assumptions such as the investments chosen, how long people will live and how a person will draw their pension.
Towards the end of 2020, the Government took a Bill through Parliament which made it compulsory for all schemes to provide the pension information needed for savers to see their overall pension saving on pension dashboards. It will be followed this year by detailed regulations.
Over the course of 2021, the Pensions Dashboard Programme will be working closely with its chosen suppliers to quickly begin building, integration and testing the digital architecture of dashboards.
In the meantime, pension schemes will be busy preparing their data and systems so that the majority will be ready to join the first pensions dashboards when they start to operate. Before we know it, pensions dashboard will propel retirement saving into the 21st century!