Director of Policy and Research, 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.
On average people have over 10 jobs during the course of their lifetime. Thanks to the very successful policy of automatically enrolling most people into a workplace pension, they are likely to have a separate workplace pension with each employer. Not surprisingly, many people struggle to keep track of their pensions with the result that they often do not know how much money they have saved.
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.
Not surprisingly, many people struggle to keep track of their pensions with the result that they often do not know how much money they have saved.
The challenges of implementation
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.
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 straight forward task but currently pension schemes use different ways of estimating future pension income. This can depend 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 set a realistic timeframe to enable these sorts of issues to be ironed out. Savers will be able to use dashboards from 2023.
What happens next?
The Government is currently taking a Bill through Parliament which will make it compulsory for all schemes to provide the pension information needed for savers to see their overall pension saving on pension dashboards.
This Bill should be in law by the end of the year and it will be followed next year by detailed regulations. 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 in 2023.