Pension dashboards have long been vaunted as the holy grail designed to help millions of us trace ‘lost’ workplace pensions.
The Department for Work & Pensions' consultation on the draft pensions dashboards regulations, launched last month, provides an opportunity for both the industry and individuals to influence how the dashboards will work in practice.
For advisers, the introduction of pension dashboards could revolutionise client interaction as people engage more with their pensions – but how exactly?
Right now, tracking multiple pension pots is far from simple, and it is even harder to know the best course of action when looking to consolidate pots. Nowadays, the concept of a job for life is unrealistic. On average, people will have around 11 jobs during their lifetime. This trend has meant it has become increasingly difficult for people to keep track of all their pension pots.
With greater access to their previous pension pots at their fingertips, people are more likely to seek professional advice to help them navigate the complexities of their pension history. And once granted access by clients, advisers will be able to view their dashboard data, saving time, and making it easier to provide clear and efficient counsel.
This seismic change will empower clients and advisers alike to make better-informed pension choices and present more options to them in a clearer format.
Building on the progression of AE
In the UK, it is estimated that up to 1.6mn workers have lost track of their workplace pension pots, according to The Association of British Insurers, which also puts the figure at around £19.4bn, comprising of 1.6mn pots with an average size of £13,000.
It has been noted that in recent years, with more people changing jobs regularly, the number of workers with small pension pots under £1,000 has surged. Automatic enrolment allows millions of people to benefit from workplace pensions for the first time – even if they move jobs frequently.
With 2022 marking a decade since the start of AE, the introduction of pension dashboards will look to build on this by providing users with a one-stop shop overview of their pension pots and savings.
Although the pension dashboards could help to revolutionise retirement planning, the UK is stuck in the slow lane when compared to many other countries and could learn a great deal from their advances.
Learning from others
Australia is just one country that is light years ahead of the UK – both with its AE superannuation accounts and its established pensions dashboard, which was introduced by the Australian Tax Office in 2013.
Users can log into the ATO portal and use their tax file number to see the latest valuation of all their active super accounts, as well as any unclaimed money belonging to them. And, after introducing a consolidation option more than seven years ago, users can now easily consolidate multiple small pension pots created through mandatory savings in just a few clicks.
