The Pensions Dashboard: What You Need to Know

The Pension Tracing Service offers one option to track down old pensions. However, it is a lot of legwork and you still need to contact the scheme yourself.

The idea behind a pensions dashboard is that investors should be able to see all of their pension entitlement in one place, reducing the risk of your fund going unclaimed. It is not fully operational yet, but the basic concepts are explained below.

What is a Pensions Dashboard?
A pensions dashboard would allow you to see all of your pension funds from various providers, as well as your State Pension, in one place. This requires the government, multiple companies, and the Pensions Regulator to work together to ensure the data can be shared smoothly and securely.

The scheme is still in prototype form and the legislation allowing the framework to be created was only approved in 2021. At the time of writing, the Pensions Dashboard Programme (PDP) is undertaking an industry consultation on the standards for the new programme in terms of security and effectiveness. This is due to be published towards the end of 2022.

While the scheme is not yet live, it is likely to work as follows:

• The dashboards will be available through multiple organisations, including the Money and Pensions Service.
• You will log on to the website securely with a username and password. At this point you will also give your permission for your data to be shared.
• The system will send queries to multiple pension schemes and the Department of Work and Pensions to find pension schemes matching your details.
• A report will be produced showing the names of schemes and the estimated value. You will be able to click on each pension for more information, including scheme contact details.
• The system does not hold the data directly as it fetches the information on demand.

There is no set date for the introduction of the technology, but it is thought that it is a few years away.

Why is it Being Introduced?
There are a number of reasons that the pensions dashboard concept is being introduced now:

• Keeping track of old pensions over the course of a working life has always been problematic. If someone changes jobs ten times during their career, they might have ten pension schemes, all with different companies and different scheme rules.
• Auto-enrolment means the number of people in pension schemes, particularly those with small pots, has increased.
• Many people lack confidence over their financial decisions and the lack of transparency around pensions has not helped with this.
• It is only now that the legislation and technology are in a place where the dashboard concept is possible.

What Are the Benefits?
When the dashboard service becomes available, it is likely there will be several benefits:

• Consumers will have easy access to their pension valuations and scheme details.
• It will be easier to get an idea of your potential pension income, allowing you to make additional contributions if your projections are falling short.
• It may also be able to help you identify gaps in your State Pension funding.
• If you need to contact any of the pension schemes, the information you need will be readily available.
• It will be easier to see if your pension investments are on track and whether the funds are performing as expected.
• If you need to obtain advice on your pensions, the process should be much more streamlined.
• It is less likely that pensions will go unclaimed.
• When a scheme member dies, the new system should make it easier for executors to gather information on the deceased person’s pension entitlement.

Potential Disadvantages
There are many reasons why a pensions dashboard is a good idea. However, at this early stage, there are a number of potential pitfalls to consider.

• The scheme has been several years in the making and we are still a few years away from completion. People who are close to retirement age now may not have a chance to benefit.
• With any new system, particularly those requiring the cooperation of multiple organisations, there are likely to be teething problems.
• As the data will be fetched from external organisations, glitches or inaccuracies with one provider could distort the whole picture.
• We do not yet know the vulnerabilities in terms of data security.
• As technology advances, there may be fewer options available for those who aren’t computer literate.
• The system will give investors information, but it is less clear if there will be any guidance to help investors evaluate the information, or any functionality allowing them to act on it.
• The costs of implementing the scheme will be vast, at a time when costs in general are going up.

Tips for Managing Your Pension Effectively
You do not need to wait for the new dashboard to make sure your retirement is on track. Below are some tips for managing your pension now:

• Keep up to date with your pension schemes and sign up for online access where possible.
• If appropriate, consider moving your pensions to one place. You might be able to save on charges, improve investment choice, and simplify administration. Of course, you will need to check that you will not be losing valuable benefits from your existing scheme.
• Review your investment choice regularly to ensure it is well diversified and in line with your views on risk.
• Consider increasing your contributions every year to boost your retirement pot. Pension contributions can also help you save tax.

A financial adviser can help you make sense of your pensions and gain clarity on your retirement options.

Please don’t hesitate to contact a member of the team to find out more about retirement planning.