‘Game changing’ scheme will ape online banking and increase visibility of multiple pots
The pensions industry has agreed to launch a long-anticipated ‘dashboard’ that will allow savers to see all their workplace savings in one place.
The government hopes the new platform will aid decision-making and help individuals focus on their likely retirement income. The dashboard has been discussed for a number of years and has been delayed on numerous occasions, but the Treasury has now announced that a prototype will be launched by March 2017.
The dashboard will be designed to allow people who have worked for several employers to plan more effectively for their retirement. The Department for Work and Pensions estimates that up to £400m of pension payouts are currently unclaimed.
Economic secretary to the Treasury Simon Kirby said: “Pensions and savings decisions are some of the most important a person will make during their lifetime. The government is determined to make sure people can access the information they need to plan effectively for their future.
“Technology like mobile phone apps has made day-to-day banking easier than it’s ever been, and it is time for pensions to catch up. Think of a future where you can compare your pension pots with the touch of a button.
“The pensions dashboard will unlock a huge amount of information that will help people make the best choices for them and I am delighted that 11 of the largest pension providers have agreed to work together to build a working prototype.”
Tim Thomas, head of employment and skills policy at manufacturers’ body EEF, said the dashboard could be a “game changer” for savers.
“For too many, their pensions remain shrouded in mystery, with too little engagement and little opportunity to see, overall, the totality of all their pots,” he said. “The dashboard has the capacity to change this, and act as an enabler for savers to see, for the first time for many, what they can expect in retirement.”
The Association of British Insurers will manage the project to create the prototype, with input from Aviva, Aon, HSBC, LV=, NEST, Now: Pensions, People’s Pension, Royal London, Standard Life, Zurich and Willis Towers Watson.
The development comes at a crucial juncture for workplace pensions. With deficits reaching record levels, a number of major employers – most notably Tata Steel – have suggested that altering the structure of their defined benefit schemes to cap future payments is the only feasible way to bring the situation under control.
New analysis from consultancy Hymans Robertson suggests that the total defined benefit pensions shortfall across the UK could be slashed by £175bn by allowing employers to use the consumer price index to calculate annual increases rather than the retail price index.
It added that if all schemes could reduce increases to the minimum required by law – overriding contractual commitments made to employees – then up to £350bn could be cut from the deficit. This would reduce the average saver’s benefits by £32,500, according to the consultancy, but it compared this to a loss of £45,000 if a scheme entered the Pension Protection Fund because of insolvency.
The Work and Pensions Committee is currently asking for written evidence on issues including the balance between meeting pension obligations and ensuring the ongoing viability of sponsoring employers.
Hymans Robertson’s head of corporate consulting, Jon Hatchett, said: “Deficits could be reduced by hundreds of billions if schemes could turn off, or reduce, annual increases to pensioner income linked to inflation. However, current rules prevent companies breaking promises made to pensioners.”
Story via – http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2016/09/13/government-to-launch-pensions-dashboard-to-demystify-workplace-saving.aspx