Personal & Workplace Pensions

Seven major pensions organisations sign up for Pensions Dashboards Programme: This week’s news roundup

This week's finance news highlighted how the future of withdrawing cash could look, the plummeting cost of car insurance, and the government rejected calls to lower the state pension age to 60. Read about these stories and much more in our weekly finance news roundup.

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Seven major pensions organisations sign up for Pensions Dashboards Programme: This week’s news roundup
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The Pensions Dashboards Programme (PDP) has recently announced that seven major pensions organisations have signed up for its first test phase. The organisations will take part in the Alpha test phase with a range of insurers, third-party administrators, and software providers working alongside the PDP as part of its Develop and Test phase. 

The seven volunteers could eventually collectively provide coverage of more than 30 million pensions. Those taking part are Aquila Heywood, ITM, Legal & General, Aviva, Capita, Phoenix Group, and Mercer.

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Creating a strong foundation

It is hoped that early involvement in the testing phase will help create a strong foundation that will help with the ongoing development of the programme. There are already calls for participants that would like to take part in future testing phases. The current participants will help with systems testing. More than 30 million pensions covered by these seven providers will eventually be available for consumers to access via dashboards.

As part of the Pension Schemes Act 2021, a framework has been implemented that requires pensions schemes and providers to use dashboards. This will eventually enable people to view all of their pensions in one place, reducing confusion and saving a lot of time. It is thought that connecting to dashboards will become compulsory within the next couple of years.

In preparation for this, the PDP is working with volunteers so it can test the technology and systems properly. The PDP will develop the technology for the dashboards during the Alpha stage with the seven participants. The PDP aims to make it easy for pension schemes and providers to connect to dashboards. Its aim during the earlier stages is to get the industry prepared for the changes in 2023.

The Head of Onboarding at the PDP, Paul Noone, said, “The willingness of such well-respected organisations to engage early with the dashboards ecosystem is hugely positive. It allows the programme to develop its systems and processes in tandem with some of the biggest pension providers in the market.  The embracing of dashboards by these major providers sends a positive message to the wider industry about the advantages of early connection.”

He added there had already been significant interest from other providers about taking part in future testing phases. Mr Noone also said that providers would not have to wait for compulsory onboarding changes to take place, as they would receive support to do this early if they wished to do so.

Click and collect could become the future of cash withdrawals

People across Britain who are looking to withdraw cash may soon be able to turn to click and collect style services to do this. This comes after a surge in ATM and bank closures, which has left some struggling to find a convenient and speedy way to gain access to their money.

The click and collect style service is down to a new app called Sonect, enabling consumers to go to local shops to withdraw the money they need. The app uses the same technology that retailers implement to pay out lottery winnings. It could provide increased ease and convenience to those who want to access money but do not have an ATM or bank near them.

A location-based app

The app is location-based, enabling people needing cash to find shops that have the money for them to withdraw. The app can match the demand for cash withdrawals with the money available in the tills of shops.

It is estimated that 95% of the population of the UK lives within a mile of a lottery terminal, which means the vast majority will be able to benefit from this app. Sonect said there is a crisis in the UK regarding access to cash because of the enormous number of bank and ATM closures. This method could help to solve the problem for many.

The method will be trialled in Italy later this year; Sonect has signed a contract to enable cash withdrawals from 35,000 lottery terminals across the country.

The UK Director of Sonect, Ron Delnevo, said, “In the UK we're under-utilising the potential of modern lottery terminals to provide a wide range of services to customers of community retailers. The terminals can become a vital convenient local touch-point for access to cash, and other services the public have a right to expect on their doorsteps.”

He added, “We really need to seize this technical innovation opportunity in the UK to support all the local needs of the public and the retailers who serve them and, critically, to solve the huge access to cash crisis.”

Sonect has already been trialling the scheme in several areas, including Burslem and Tunstall in Stoke-on-Trent. Hundreds of locals in these areas have expressed an interest and already signed up for the scheme.

Car insurance premiums fall to lowest levels in five years

Recently released data from the Association of British Insurers has shown that car insurance premiums have fallen to their lowest levels in five years. In the second quarter of this year, premiums for comprehensive cover fell to £430, which reflects an average drop of £30 compared to the same period last year and a decrease of £44 compared to before the global pandemic.

In addition, officials from the ABI said that the average cost of cover in the second quarter is the lowest quarterly average since 2016. This comes as good news for motorists, as it means that they are more likely to get cover at an affordable price.

A range of factors contributed to lower costs

According to the ABI, several factors may have contributed to the drop in average car insurance costs. One of these is the drop in claims over the past year, with fewer people being on the road because of the Covid-19 pandemic and various lockdowns.

The instruction to work from home, which was in force for much of last year, meant there were far fewer cars on the road as people no longer had to commute. In addition, many not working from home were furloughed, also reducing traffic and claims.

Laura Hughes, the ABI's manager of general insurance, said, “The fall in the average motor premium clearly shows that millions of drivers continue to benefit from cost savings made by insurers during the lockdowns. It will be interesting to see if there is a rise in motor claims as we emerge from the pandemic and road traffic continues to increase.”

Claims and price drops stabilising

Officials from insurance giant Direct Line have also said that both the level of claims and the cost of insurance cover began to stabilise in the second quarter. This came as Covid restrictions began to loosen and things moved a little closer to normality.

However, it was pointed out that for many, there has been a permanent change that now enables them to work from home. This has led to the frequency of claims remaining below average

The ABI also revealed that the average cost of car insurance had dropped  £38 during the first half of 2021. However, the industry body also pointed out that insurance companies still had to contend with the rising cost of repairs to vehicles.

Calls for lowering pension age to 60 rejected by government

Following a Commons petition signed by tens of thousands of people, the government has rejected calls for the state pension age in the UK to be lowered. A petition signed by more than 70,000 people called for the state pension age to be reduced to 60.

The Department for Work and Pensions said it would be 'neither affordable nor fair' to reduce the age of entitlement to 60. The petition called for the changes to be implemented right away, with campaigners saying that Covid-19 has put the pension age under increased scrutiny.

Restoring the future of the younger generation

The state pension age was increased last year to 66 for both men and women, and there are plans to increase it to 68.

Just over a decade ago, the state pension age was 60 and 65 for men and women, respectively. By 2018, qualifying ages were equalised and have since continued to rise.

Last year saw additional changes that meant both men and women born between 6th October 1954 and 5th April 1960 would not be able to receive their state pension until they reached the age of 66.

Those campaigning to have the pension age lowered said part of the reason is to restore the younger generation's future. With more older people working longer before claiming their state pension, it takes away opportunities from younger people looking to get into work.

They added that the number of younger people losing their jobs over the past 16 months because of the pandemic brought increased importance to this issue. According to the campaigners, older people must be allowed to retire earlier so that younger people can benefit from increased employment opportunities. 

Provident Financial ends doorstep lending putting thousands of jobs at risk

Provident Financial has revealed that after providing doorstep loans for more than 140 years, it will be winding down this arm of its business. This means that thousands of jobs could be at risk, although there is a chance  Provident could sell on its home credit business. If the business is wound down, there could be over 2,000 job losses.

Officials from the company cited various reasons for the decision to stop doorstep lending. This included "changing industry and regulatory dynamics" and "shifting customer preferences".

Over the decades, the company has become well known for providing doorstep loans to those who need cash but have poor credit. However, the company now wants to become a "broader banking group to the financially underserved customer," according to the Chief Executive of the group, Malcolm Le May.

Focusing on other areas

Provident Financial has plans to focus on other areas in the future once its doorstep lending arm has been wound down or sold on. This includes its very successful Vanquis Bank division, which offers credit cards and unsecured loans. In addition, it will focus on Moneybarn, which is its car finance division and has also enjoyed success.

Over the years, Provident Financial has faced a lot of controversy over its doorstep lending business. Despite being legal and regulated, many branded the company as a legal loan shark. Many borrowers said that they have become caught up in a cycle of debt because of the ease of being able to get money through these doorstep loans.

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