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In the 2016 Budget, the Government proposed to create an online platform to enable people to view all of their pension savings together, in one place. The Pensions Dashboard (currently still a prototype project, but due to be up and running in 2019) aims to work collaboratively across the industry to create a holistic view for members to help them prepare for and make effective financial decisions about their future.
Why do we need one?
On average, an individual in the UK might have eleven jobs during their lifetime, which means there could be eleven different pension pots associated with each of these jobs. It can be hard to keep track of all these separately, and this in turn makes it difficult to calculate how much money a person could have in total when they stop working.
Providers are very good at keeping in touch with members in a variety of ways, including annual statements through the post and their websites, but this is only effective if individuals remember to update their personal information - when they move house for example. And this is only specific to their scheme - unfortunately, they don’t share information about an individual’s overall retirement funds.
We all know the importance of planning ahead and having a realistic idea of the bigger picture, so a one-stop-shop like the dashboard could be the way forward. It’s been suggested by industry experts that providing members with a complete view of their hard-earned savings will encourage a more proactive role in their own retirement management, motivate increases in contributions and provide a better understanding of their likely finances in retirement.
How will it work?
The prototype is still in progress, but the following case study explains how it could work in practise:
Joe is nearing retirement and has lost track of a couple of his pension pots from previous employers, as well changing address a number of times over the years.
Once complete, Joe can click a button which will communicate with various parties including the Department for Work and Pensions and the pension tracing service. They use his name, date of birth and National Insurance number in order to locate any lost pension pots and these will all be brought together in the Pensions Dashboard so that Joe can see his separate pension pots in one place.
Do employers need to do anything?
The dashboard is still in development, however in the meantime, employers should be proactive in their approach and encourage employees to use the Pension Tracing Service to track down those stray pension pots they may have from previous employers. This will give them an early indication of what their entitlement to the State Pension could be by using this calculator.