In February 2018 I wrote a blog
‘Pension Dashboard – Mind the Elephant in the Room’ when it seemed at the time like the dashboard would be only a heart beat away.

To recap, the purpose of the dashboard was to allow the consumer to see the value of all pensions related to them in one central and easy to navigate system.

The original plan was for the dashboard to be delivered in 2019 and things could still be on track to meet this deadline however it’s not all been plain sailing.

A consultation was recently announced and the Department for Work and Pensions (DWP) has now published its response which sets out its proposal to get this idea ready for consumers which will ultimately give them more information around their pensions and potential retirement incomes either on a desktop, tablets of mobile phone app.

Details released by the DWP include:

  • A commitment for legislation which compels ALL pension providers to make data available through the dashboard
  • An expectation that the majority of schemes will be ready to ‘go live’ within a three to four-year window
  • Confirmation that details of the state pension will be included on the dashboard, sooner rather than later

The Work and Pensions Secretary, Amber Rudd, has confirmed that she is scheduled to see the first industry dashboards later this year.

Although the dashboard is still a good idea, my view on the dashboard still hasn’t changed from last year. Is the drive to accrue such data a precursor to a radical change to the State Pension?

We all know that there is a pension crisis looming and the Government have already taken some very constructive steps to try and address this issue by introducing automatic enrolment, pushing back state pension ages and from 2028, are changing the date when private pensions can be accessed (10 years before someone’s state pension age) but more still needs to be done.

Will the government use the data contained within the pensions dashboard to review what the average UK’s individuals’ pensions wealth looks like? Will the great concept of the pension’s dashboard be the very stick that the government choose to beat us with?

Could this information be used to start means testing State Pensions at some point in the future? Surely any change to the state pension will mean an overhaul in the UK tax and NI system too.

As stated in my previous blog, any change to the state pension could well be political suicide however it could be said that this is already happening with the current political fiasco around Brexit.

Richard is one of our Strategic Employee Benefit Consultants and can be contacted on 01883 332260 or at richard.grover@wingatebs.com

First announced in the 2016 Budget, the Pensions Dashboard is the latest step in the government’s wider strategy to help people to engage with their pensions earlier rather than at retirement.

The prototype was launched in Sept 2016 and after a busy period of close cross-industry collaboration, it is currently being demonstrated to Government, industry and other stakeholders; an important step towards delivering services by 2019.

The aim of the Pension Dashboard is to help people keep track of all their pension saving including those from previous employers. The Department of Work and Pensions (DWP) estimate that circa £400bn of pension savings are ‘lost in the system’ and therefore the introduction of a database to trace details of these funds should be welcomed.

Research has shown that:

  • On average, an individual will have around 11 employers over their working life meaning its not unreasonable they could have up to a 11 separate pension pots.
  • People approaching retirement find it difficult to keep track of their various pension pots. This is mainly due to people not informing their pension providers of a change of address when they move home. From personal experience, people tend to focus on companies to whom you are paying money for services such as Sky, utility companies and the like.  Pension providers fail to hit the radar as in many cases no contributions are being made to historic plans or payments are being made directly by an employer.

As such the Dashboard is a great idea and has been warmly welcome by the industry. The plan is for the Dashboard to work as follows:

  • An individual confirms their identity in a similar way to the Government Gateway
  • An individual gives the dashboard permission to share their information with multiple pension schemes and providers
  • Queries are sent to all the different pension schemes and providers to look for the pensions pots which match that individual’s details, including the State Pension
  • The system reports back on all the pensions it has found on a single page, showing the names of the schemes and their estimated value at a particular retirement age

Individuals being unable to trace  previous pensions on reaching retirement is a common problem we encounter. This can be due to a number of reasons: policy documents being misplaced, past employers merging or being acquired, employees moving address, pension providers poor administration.

As such a centralised database of pension savings is long overdue and its introduction will give people far better chance of understanding what pension provision they have, with whom and its value. This also has the potential of reducing the number of people who transfer their pensions and incur charges for doing so, simply because they want to view all their pensions in one place.

Perhaps it’s the cynic in me, but (and it’s a big BUT) it leaves me wondering if the drive to accrue such data could be a precursor to a radical change to the State Pension. If HMRC know what the pension landscape looks like for individuals it’s reasonable to speculate there may be a time in the future when Government uses this data to reconsider the need to supplement this with a State Pension.  Could this information be used to start means testing State Pensions a some point in the future?

Arguably,  this would be political suicide but against the ever increasing struggle to balance the treasury books, the opportunity to reduce the cost of providing the State Pension at its current and escalating levels may prove impossible to ignore at some point.  The level of private pension saving is increasing significantly due to Pension Auto Enrolment at the same time as the HMRC’s ability to see the results of this begin to appear on their own database…….

 

Richard is one of our Strategic Benefit Consultants and can be contacted on 01883 332260 or richard.grover@wingatebs.com