Pensions Auto-Enrolment has been a major success so far. Millions of savers have been enrolled in company supported pension offerings since the start of this initiative in 2012, with many more to come in the near future.
This is undoubtedly a good thing for the UK, and will help narrow the much discussed “savings gap”. Yet the success of the policy does also create some new issues. Perhaps the biggest challenge is how best to enable savers to keep track of their pension savings as they move from one job to another.
Many solutions have been considered, with the automatic transfer system (known as pot follows member) looking like the preferred option until recently. Yet this approach was not without its challenges, and last October the project was temporally shelved by The Minister for Pensions.
Roll forward to last week, and the Budget documents included the following commitment:
“As people work longer and change jobs more often, pension savings can become confusing. The average person will move employers 11 times over their working life, meaning they could end up with 11 or more private pensions by the time they retire. Research shows that over a third of people approaching retirement find it difficult to keep track of their pension pots. To help the next generation to clearly view their pensions savings, the government will ensure the industry designs, funds and launches a pensions dashboard by 2019. This will mean an individual can view all their retirement savings in one place.”
It would therefore appear that the approved way forward on this key pension issue at present is the collating of data to allow consumers (or savers if you prefer) to view all their retirement savings in one place. This seems like a pragmatic and sensible solution to the issue, as it both empowers and informs the consumer.
Readers will note that the promise is only for an information dashboard of pension savings – with no mention made of other savings such as the recently announced Lifetime ISA. It remains to be seen if such plans will ultimately fall within the scope of this project.
Clearly it is very early days for the proposed pensions dashboard, and we will update our followers on this issue as and when progress is announced.