Let’s face it, not all of us are as well organised as we should be – particularly when it comes to storing and filing financial paperwork. Hidden away in unmarked boxes or in drawers that haven’t been opened for years, there could be letters from banks, insurance policies, receipts from HMRC and details of half-forgotten pension plans or savings schemes.
It was our very human tendency to file and forget vital documents that lay behind the Government’s plans to introduce a ‘Pensions Dashboard’ designed to help people keep track of multiple retirement plans.
Now it seems the scheme – widely supported by the pensions industry – is on the verge of being abandoned.
One Lifetime, Many Jobs
In the age of auto-enrollment, the vast majority of people who are in employment are now members of a workplace pension scheme.
Under the law, employers must offer a retirement plan and everyone is automatically signed up unless a decision is made to opt out.
The potential problem is that the average person changes jobs many times during a working lifetime and every move to a new employer is likely to mean a new pension plan.
Add to that additional top-up schemes and it seems likely that many of us could struggle to keep track of how much we have saved and what that is likely to mean in terms of a monthly retirement income.
Announced in the 2016 Budget, the Pensions Dashboard was to have been a one-stop-portal that would allow scheme holders to see at a glance where they stood financially.
Under the plan, details of all pension plans would be uploaded to the platform automatically, giving users a 360-degree view of their pension provision.
Fast forward two years and it seems the Department of Work and Pensions (DWP) is cooling on the idea. A little over a week ago, The Times newspaper reported that minister in charge, Esther McVey had decided to sideline the plan and focus available funding on the rollout of Universal Credit.
That report has not been denied even when Pensions Minister, Guy Opperman was asked directly by MPs, “No decision has been made,” he told the Work and Pensions Committee.
“When it has been made, it will be communicated in the appropriate and proper way, and it’s probably not appropriate for me to comment any further than that.” This was not seen as a ringing confirmation that the plan would go ahead.
Do We Need The Dashboard?
And the pensions industry is deeply concerned.
The Association of British Insurers has already written to the Committee, urging the government to press ahead and rejecting suggestions that the DWP would be better spending money elsewhere.
“ The DWP is the largest Department in Whitehall and is funded by the taxpayer to do more than one thing at a time. There is no reason why this project should not be proceeding at pace, given the work is already done and the high levels of support from industry,” the ABI said.
And according to Graham Peacock, Managing Director of workplace pension provider Salvus Master Trust, failure to press ahead with the Dashboard could create real problems for pension plan holders.
Juggling The Pots
“The Government first proposed that your pension pot should follow you from job to job.
That was abandoned. Then Dashboard was muted and was making progress until DWP took the project on, only to announce last week that they will not progress the Dashboard.
It means that the average worker who will have at least 11 jobs will also end up with 11 pension pots and have to try to make sense of all 11,” he said.
Jasper Martens, Marketing Director at pensions management app provider PensionBee agrees that this could be just too much to deal with, citing the example of a worker with 12 pension pots.
“It goes without saying that managing twelve separate pots is more problematic than just one consolidated pot,” he says.
Problematic but not necessarily impossible.
In a worst-case scenario, a multiple pension holder may not only have lost – or temporarily mislaid – the paperwork of a dozen scheme but also forgotten that some of them exist.
If that’s the case, he or she will not be in a position to contact the scheme provider and arrange a retirement date, lump sum and annuity.
But as Martens points out, some help is available.
“One service worth mentioning is the Government Pensions Tracing Service which allows you to easily track down all of your pensions”, he says.
So The first step is to track down all pensions you have using a service like the Pensions Tracing Service.”
Once all the pensions have been tracked down, Martens says the policyholder should write to all the providers updating them on any change of address.
He also advises that it can make sense to consolidate multiple schemes into a single pot – something that the pensionable app will help you to do.
However, he urges a degree of caution as those who consolidate their pensions may lose out on additional benefits linked to individual schemes.
“If you do choose to do this for simplicity’s sake, make sure you know what you are doing or you’ll get shortchanged,” he warns
Less than Automatic
But what none of this offers is the degree of automation that would have been provided by the Pensions Dashboard.
Graham Peacock cites his own company ’s service.
“ Salvus has developed the ability to allow its members to log in and add all of their existing pension pots into our ‘Retirement Planner’.It’s not automatic and it needs each member to add each pension pot and update the values each year but without Dashboard which would have automated this….there is little choice.”
In other words, managing multiple pension schemes is not impossible – there are companies that offer pension planning and consolidation services.
But the Pensions Dashboard, as originally outlined by the government, would have made tracking plans and their benefits considerably easier.
As Peacock explains, Dashboard was intended to identify individuals through a single ID (from credit checking agency Experian), paving the way for all relevant information to be uploaded.
The industry is putting a considerable amount of pressure on Government to follow through on its commitment but it remains to be seen if the lobbying of groups such as the ABI will bear fruit.
In the meantime, we should all be careful when we file away financial papers.