We live in a world increasingly reliant on technology and online services. Yet it is currently far from straightforward for people with membership of a number of different pension schemes to see details of all their pension savings in one place. The idea that the pensions industry would design, fund, and launch a pensions dashboard was first announced at the 2016 Budget.
The rationale is that, as people work longer and change jobs more often, pension savings can become harder to keep track of. In recent years, the government has regularly trotted out the statistic that the average person will change employers 11 times over their working life, meaning they could end up with 11 or more private pensions by the time they retire. Research shows that over a third of people approaching retirement find it difficult to keep track of their pension savings.
The pensions industry was tasked with creating a way for people to see all their pension savings in one place, including their State Pension entitlement. The hope was that this would increase member engagement with their pension savings and lead to millions of pounds in “lost” pensions, which the government acknowledges exist in the pension system, being reclaimed. All, of course, without any expense for the government.
The 2016 Budget had originally set a deadline of April 2019 for the pensions dashboard to be in place. Whilst the Treasury initially promoted the project, last October the Department for Work & Pensions (DWP) assumed ownership.
Few would argue that the idea of a pensions dashboard, providing data on everyone’s pension savings, is not a good one which inevitably should happen at some stage. It is the kind of innovation that consumers would find helpful and, more importantly, expect, in an age in which technology and automation is ever-advancing.
Pension providers, banks and other financial providers, are in support of the dashboard and for them it is not a difficult project to sign up to. Most data in defined contribution pension schemes could be easily loaded onto, and maintained, on a dashboard. Much of it already exists online in one form or another anyway. The project is more difficult for defined benefit pension schemes. This sector is responsible for large amounts of legacy data, which is often not held in a manner which would be easily loadable, and maintainable, on a dashboard. The DWP is aware that compulsion may be the only way to ensure data is provided to the dashboard, but this may take time to implement.
Two years on from the 2016 Budget, and the industry is now awaiting a feasibility study, which the DWP had promised would be published in March, although it now appears to be scheduled for issue ‘in due course’. It’s not clear what has caused the delay and the hope is that it will be published shortly after the Easter break.
The DWP will want to ensure that as many people as possible can both trust and access the pensions dashboard and that the data on it is secure from those who might seek to access and misuse it, such as cold callers and scammers. While the DWP is working with the pensions industry to make the dashboard a reality, the original implementation deadline of April 2019, set by the government, is looking increasingly unlikely.
It is more important to get the dashboard right, than to rush it in to meet a political deadline. The pensions industry has suffered over the last couple of decades with government rushing through major changes, such as pensions flexibility, at the last minute. It is never ideal for major changes, however laudable, to be introduced when much of the detail, and in many cases the underlying legislation, is not settled until the eleventh hour. This only increases the scope for things to go wrong.