People need an overview of their savings but there is no easy way to deliver thatby Andy Davis / March 3, 2019 / Leave a comment
What have I got and where is it? These are arguably the eight most important words in the pension universe. The questions look simple: finding answers is anything but.
People move jobs. They build up bits of occupational pension with different employers, some public-sector, some private. They may have personal pensions too. Then there’s the state pension. And now that millions more people are saving into workplace pensions through auto-enrolment, the problem is growing. Working out what you have and where is a pain for the few who even try.
Pensions are hardly glamorous at the best of times. But if it’s all but impossible to see what’s going on with yours, that makes it even harder to overcome the central challenge they present—persuading people to engage with a question that is so easy to put off to another day.
Some years ago, so-called “pot follows member” pensions were discussed: the idea was that we would take our savings with us when we moved jobs, keeping our affairs simple by having only one occupational pension pot. But this would have been complex to implement and was dropped by Pensions Minister Guy Opperman last April on the grounds that “now is not the right time.”
The plan now—as reiterated by the minister here—is to create an online “pensions dashboard.” This will use technology to assemble data automatically from the schemes we belong to and give us an overview of all our savings, along with a forecast of what they will be worth when we retire. It’s a great idea—and an example of how technology could make financial services more comprehensible for millions of people. Similar initiatives have already launched successfully in several other countries, as new research from the People’s Pension scheme demonstrates.
But make no mistake: creating a UK version will be expensive and will take years. We have an extraordinarily complex pensions system with tens of thousands of private and public sector workplace schemes, plus millions of personal pensions. Most occupational schemes have multiple, ancient IT systems that will struggle to provide the data feeds that the dashboard will demand. Cleaning up all this data and making it usable is a Herculean task.
The first dashboard is supposed to launch this year, which looks hopelessly optimistic. And who will fund it? The beneficiaries will be the scheme members and they will ultimately foot the bill through the charges they pay to their scheme administrators. The dashboard clearly needs to happen but given the complexity of the task, the risks of cost and time overruns are huge. This could get messy.