10 Oct 2022
There has recently been a lot of press concerning pension scams and the problems with the misinterpretation of recent legislation flagging simple DC to DC pension transfers as high risk and needing additional investigation before transfers can be processed. There is also a lot of marketing from new tech providers like Pension Bee who are looking to disrupt the existing insurance companies by making it easier for consumers to access their plans, provide simple and easier to understand products and promote non advised pension consolidations. These issues are ultimately caused by the struggle the regulator and the industry have with whether it is appropriate/inappropriate for consumers to transfer pensions without advice. However, I think the bigger question we should be asking is why consumers want to consolidate their pensions. At Wingate we get lots of enquiries of this type from members of workplace pension schemes who have many small pension pots from different employers. When you ask why they want to do this the type of comments we get are:
- I want to see my pensions in one place
- I am losing track of what I have where and want to simplify my arrangements
- I need to know what I have so I can find out if I am on track for retirement
- Do I have enough in my pensions
Interestingly rarely do they mention charges and a desire to reduce them or improving or comparing investment performance. All of which are areas which traditionally advisers and the regulate would focus on. This leads me to believe that ultimately consumers do not necessarily want to consolidate their pensions it’s just they are finding them difficult to manage as they have multiple plans with different providers and are confused. It is a real shame the pension dashboard system proposed by the government continues to be delayed as this could help with a number of these issues. At Wingate we have decided not to wait indefinitely for the dashboard but have recently launched our own pension portal “Engage” which is available to employers of any size. Engage has been specifically designed to deal with the real reasons why employees struggle to engage with their pensions and want to consolidate their plans. It enables an employee to:
- See all their current and past pension plans in the Engage portal
- Get a current valuation of all their pensions
- Discover if they are on track for retirement using the retirement planning tool
- Receive regulated advice if required to help them understand their pensions and start planning for retirement
All of this is achieved without an employee having to consolidate their pensions as the Engage portal links to each of their pension provider online portals and uses their login details to obtain current valuations. This avoids the potential pitfalls of amalgamating pensions such as incurring exit penalties or higher charges, retains the benefit of having access to a wider range of funds and performance.
The portal is also designed to promote the value of the workplace pension provided by the employer who is providing access to Engage. It does this by showing the employee a breakdown of the actual contributions into the company pension highlighting the employer contribution. It also shows the benefit of tax relief, the additional tax and national insurance savings of contributing via salary exchange/sacrifice.
We believe that Engage is game changing by giving control back to employees by providing them with a holistic overview of all their pensions and the potential retirement income these could generate which they can compare against their retirement goals without the expense of employing an adviser. This is backed up by recent Association of British Insurers (ABI) research of 4,000 people which suggested the following: –
- 53% of consumers say they are likely to use pension dashboards
- 67% of people aged 18 to 34 and 68% aged 35-64 would find it useful to use an interactive slider to see what happens if they adjust their contributions
If you would like more information on how Engage could transform your employee’s engagement and understanding of pensions please get in touch.