UK consumers are struggling to stay on top of what money they have saved for retirement. Only last month, new research revealed the number and value of lost pension pots were six times the figures previously estimated -around 1.6 million individual pots.
Worth a total of £19.4billion, that’s the equivalent of £13,000 per pot, according to the Association of British Insurers (ABI), which represents pension providers, and the Pension Policy Institute. That’s not surprising when you learn that the average person will have around 11 different jobs over their lifetime and move home eight times.
There’s a hole in my bucket…
The government predicts that there could be as many as 50 million dormant and lost pensions by 2050. That’s why the launch of the Pensions Dashboards is so important — to make sure people stay connected to their work and personal pension pots. The idea is that they will help people keep track of all their pensions in one place – online using a computer, tablet or even a smartphone.
It’s not just about making sure you don’t lose any pots — having a proper picture of how much your pension savings are worth and what you might receive in retirement can be an invaluable tool in planning for later life.
The idea of a ‘dashboard’ was first mooted by former chancellor George Osborne amid concerns that employees who now automatically pay into workplace pensions will lose track of them. The concept has developed further so that they will bring together private savings as well as state pension entitlements.
Is it fixed?
But it could take years until savers get a proper overview of their increasingly complex pensions as not all data will be available from day one, such as state pension information. Plus, any data needs to be accurate for it to enable meaningful retirement planning.
Auto-enrolment pension providers have already admitted that records are not necessarily reliable as there are significant numbers of errors in the auto-enrolment contributions data.
The dashboards will present huge logistical problems for the pensions industry as older schemes are not recorded in a format that would allow electronic handling. To get legacy schemes to do this would result in huge costs — usually passed on to customers — and long delays.
However, when up and running the dashboards will have many benefits. Apart from collating all of the transfer values of your retirement savings, they will also help people see if their money is sitting in poorly performing investments or subject to excessive charges. This could encourage them to seek better value for money and understand how much more they need to save.
The Government has committed to launching Pension Dashboard services by the end of 2019. More details on will be firmed up in the coming months following a consultation which closes later this month.
Watch this space.