Pension dashboard has potential to transform the way we engage with our saving for retirement, but has been kicked down the can yet again.
Pension savers have been dealt another blow with the Government confirming the pension dashboards will be delayed still further.
The pension dashboard has been a policy idea that’s been on the cards for years now, without ever truly getting off the ground.
The thinking is simple, but makes a lot of sense.
One of the (many) reasons that people struggle to engage with their pension saving, and how financially prepared they are for retirement, is that it’s not an easy thing to keep on top of.
This is certainly true now that we are in the age of workplace pensions, with plenty of people accruing a handful of different workplace pensions from their various employers as they move between jobs over the course of their career.
A recent study by Interactive Investor, for example, found that the typical worker has 2.4 pension pots to their name, but 10% don’t actually know how many they have.
This situation is only likely to become more pronounced in the years ahead as work patterns continue to change, and eligibility for workplace pensions increases.
Keeping track of how much you have saved in each, as well as what you’re likely to get from the State Pension, would be helpful.
It would mean that we would all be in a more informed position about whether we are saving enough, and what changes we could make to better prepare for our later years.
A dashboard would also reduce the chances of ‘losing’ pension pots. It is all too easy for the odd pot to disappear into the ether if you have a host of them in place at any one time ‒ in fact, it’s currently believed that the value of lost pension pots are worth an extraordinary £26 billion.
The dashboard is supposed to tackle that, bringing together all of an individual’s various pensions into a single place.
That way you could easily get an overview of your pension situation at any one point, and therefore take action where necessary.
Pumping the pension dashboard brakes
I think the pension dashboard is an excellent idea, and has the potential to really improve our understanding of pensions.
The trouble is that the way it has been repeatedly been delayed means I’m sceptical it will be up and running by the time I reach retirement age.
After all, the pension dashboard programme was first launched back in 2015, with the intention of having the dashboards up and running by 2019.
And yet this week Laura Trott, the pensions minister, confirmed that the pensions dashboard connection deadline has been pushed back yet again until 2026.
The previous timetable had suggested that pensions would start connecting to the dashboards from later this year, with dashboards then opening up to normal users from 2024.
It’s worth noting that even this new deadline is a bit of a fudge. Trott said that more time was needed to deliver this “complex build”, and so rather than setting out the full staging timeline in legislation, the Government will instead simply offer “guidance”.
She added: “This will give the Pensions Dashboards Programme the flexibility it needs to ensure this complex project is completed effectively.”
loveMONEY says: another missed opportunity
Let’s be clear, it is absolutely crucial that when pension dashboards do launch, they are as comprehensive as possible.
These dashboards are a huge opportunity to get savers on board, and engage with their pension setup.
If dashboards were to launch without having proper buy-in from pension providers, or with information missing, then it would be entirely counterproductive.
You would be left with savers either put off by missing information or potentially making decisions around their pension saving without being armed with all of the facts.
So prioritising getting the system right is clearly important.
However, the fact is that we have been talking about these dashboards for almost a decade and yet we still seem no nearer to actually having them in place.
Given the way they have been pushed back until likely after the next election, it’s reasonable to question whether they will ever actually go live at all.
And that would be a huge missed opportunity. It’s no secret that as a nation we aren’t saving enough for retirement, and there are plenty of good reasons for that.
Pension dashboards on their own won’t fix that situation, either ‒ you aren’t suddenly going to discover an extra £50 in your wallet to devote to your pension saving just because the dashboards have gone live.
However, a greater level of information and engagement with our pensions will serve as a nudge to focus on pension saving just as you might when saving for a deposit or a holiday.