You may already have heard of the Pensions Dashboard Programme; if not, it is something you will come across as you tackle the issue of retirement. The idea is simple: to create a dashboard that contains all of your pension assets, presented clearly and concisely. There will also be the ability to reconnect with pension assets that may have gone astray. However, this is only the start of the story!
Who owns the Pensions Dashboard Programme?
In 2019, the UK government established the Money and Pensions Service (MaPS), which brought together the Money Advice Service, The Pensions Advisory Service and Pension Wise. These are also government-backed bodies created to improve awareness of pension assets, pension regulations and the options as you approach retirement. In 2020, we saw the launch of the Pensions Dashboard Programme, which is still under development, but the regular updates suggest a ground-breaking service is on the way!
Goals for the Pensions Dashboard Programme
The Pensions Dashboard Programme was launched in April 2020, and while still a “work in progress”, the pieces of the jigsaw are starting to fall into place. The goals for the Pensions Dashboard Programme are as follows:
- Connect individuals with their pension assets under one account
- Plain English will replace industry jargon
- Create a dashboard to show estimated retirement income for individual pension pots
- Improve access to impartial guidance/regulated advice
- Present pension information in a simple, easy to understand format
- Increase awareness and confidence in the sector
- Encourage empowerment and informed pension choices
- Positive contribution to the overall financial well-being of individuals
The beauty of the Pensions Dashboard Programme concept is that it is so simple to use; it will be very informative and bring together all of your pension assets in one place.
Keeping track of your pension assets
We live in a world of mobile employment, flexible working terms and conditions, and the Internet has brought employment options into our homes. A report in 2017 by Investec Click & Invest highlighted some changing trends in the employment market:
- Historically, the average person in the UK had six jobs in their lifetime
- Millennials, aged between 18 and 34, are likely to have 12 jobs in their entire working life
- Older employees tend to focus on job satisfaction and new challenges
- Millennials seem to be more driven by money and career progression
Bearing in mind current employment pension regulations, if you have anywhere near 12 jobs in your whole working career, you could have many pension pots. So, the idea of keeping track of your pension assets in one place and catching up with those assets you had left behind certainly has its attractions.
Speaking in plain English
Some advisers will blind you with science; others will hit you with industry jargon when in reality, we just want basic, understandable information and advice. When the Pensions Dashboard Programme is complete, it will be as much an education platform as a way to monitor your pension assets. Stripping out industry jargon will allow us all to develop a deeper understanding of pension regulations, pension assets and the options in retirement. In essence, this government-backed service is designed to empower individuals to take a greater interest in managing their pension assets.
Compare and contrast retirement income projections
This is where we get to the crux of the matter, listing all of your pension assets and calculating income projections. It is all good and well listing your pension pots by value, but what does this mean for your retirement? What kind of income will these funds generate?
As projections are planned for individual pension pots, you can compare and contrast different assets and options. There are numerous considerations such as pension deferment, tax-free lump sum payments, annuity purchases, defined benefits and the flexibility of drawdown. Many people will find this information incredibly valuable, allowing you to approach pension advisers with more understanding of the options available – and what you want.
Impartial guidance/regulated advice
Over the last few years, we have seen a significant tightening of pension advice regulations covering the new pension flexibilities available. While you may already have a financial adviser in place, many people don’t. The Pensions Dashboard Programme will offer access to impartial guidance and regulated advice as and when required.
When seeking advice, it is vital to regularly look at your pension assets while also appreciating your broader financial picture. Many of us tend to look at different investment classes in isolation, savings, stock market investments, pension funds and insurance policies. These should be considered in tandem with your lifestyle and retirement aspirations. This is where regulated advice can be worth its weight in gold, allowing you to make subtle changes that can make a big difference to your retirement income.
Presenting figures and options in a simple format
While those managing the Pensions Dashboard Programme are already committed to reducing industry jargon, and more plain English, they have also promised to go one step further. All of your pension fund information, including retirement options, income projections, etc., will be presented in a simple, understandable format. Historically the sector has been guilty of overpowering individuals with numerous options and calculations. These days should hopefully be gone with the Pensions Dashboard Programme.
Increased awareness and confidence in the sector
While each of the Pensions Dashboard Programme goals is extremely useful and well researched, increased awareness and confidence are the foundations on which it is built. The industry has been guilty of overpowering individuals with options and calculations in the past. In many ways, the Pensions Dashboard Programme will be seen as an educational hub, covering all things pension related.
This is the kind of service you can use 24/7, allowing you to research those questions you may be afraid to ask. While COVID has not helped the launch timetable, this was always going to be a long-term project. Those managing the programme are in constant discussions with pension fund managers, advisers, employers, regulators and individual pension fund holders. An ambitious plan, many of the goals are challenging, but if initial indications are anything to go by, this will be a game-changer.
Whether looking at the educational side of the dashboard, the collating of pension fund data or income projections, these all come together to empower you, the end-user. There will always be a requirement to take a degree of pension advice, and overall financial reviews are critical, but empowerment will change the way you look at your pension assets.
Over the last 20 years, we have seen some of the most significant changes ever seen in pension industry regulations, creating untold flexibility and many more options. Now, with the government targeting 5 million end-users with the Pensions Dashboard Programme, the full benefit of these changes could finally be crystallised.
Improving overall financial well-being
For many people, pension assets and pension options have always been the domain of financial advisers. It is hoped the Pensions Dashboard Programme will improve pension finance well-being and overall financial well-being. Regular finance reviews should consider all of your finances, lifestyle expenses and income targets in retirement. Then there are further issues such as inheritance tax, beneficiaries and life insurance cover, to name but a few.
While the Pensions Dashboard Programme will be focusing on pension assets and pension options, it is hoped it will be the catalyst to improve overall financial well-being throughout the UK. A great aspiration and one many people hope will be fulfilled.
Now is the time to deliver!
We have seen similar schemes in the past, with ambitious targets and industry bodies talking the talk but very rarely delivering. The world of finance, and especially pensions, is still shrouded in mystery for many people. The Pensions Dashboard Programme is no one-hit-wonder. It will be developed, expanded, and undoubtedly new services and subjects covered in the future.
We will soon have the option to look at straight talking facts and figures, educational information and the opportunity to seek impartial advice/guidance. For many people, the Pensions Dashboard Programme cannot come quick enough!