Employer need-to-know: What is the Pensions Dashboard?
Why do we need one?
On average, an individual in the UK might have 11 jobs during their lifetime, which means there could be 11 different pension pots associated with each of these jobs, according to the Pensions Dashboard Prototype Project. As such, it can be hard to keep track of all these separately, and this in turn makes it difficult to calculate how much money a person could have in total when they stop working.
Providers are very good at keeping in touch with members in a variety of ways, including annual statements through the post and their websites, but this is only effective if individuals remember to update their personal information – when they move house for example. And this is only specific to their scheme – unfortunately, they don’t share information about an individual’s overall retirement funds.
We all know the importance of planning ahead and having a realistic idea of the bigger picture, so a one-stop-shop like the dashboard could be the way forward. It has been suggested by industry experts that providing members with a complete view of their hard-earned savings will encourage a more proactive role in their own retirement management, motivate increases in contributions and provide a better understanding of their likely finances in retirement.
How will it work?
The prototype is still in progress, but the following case study explains how it could work in practice:
Joe is nearing retirement and has lost track of a couple of his pension pots from previous employers, as well changing address a number of times over the years.
Joe uses his GOV.UK information to log into the Pensions Dashboard and he chooses Experian as his trusted identity provider. He gives consent to his personal details being shared with pension providers, finder services and accepts the privacy policy before continuing.
Once complete, Joe can click a button which will communicate with various parties including the Department for Work and Pensions and the pension tracing service. They use his name, date of birth and National Insurance number to locate any lost pension pots and these will all be brought together in the Pensions Dashboard so that Joe can see his separate pension pots in one place.
Do employers need to do anything?
The dashboard is still in development, however in the meantime, employers should be proactive in their approach and encourage employees to use the pension tracing service to track down those stray pension pots they may have from previous employers. This will give them an early indication of what their entitlement to the State Pension could be by using this calculator.
The author is Laura Matthews, workplace wellbeing consultant at Barnett Waddingham.
This article was provided by Barnett Waddingham.
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