After all these years of waiting for a pensions dashboard, will it actually achieve its objectives when it finally does arrive? A new report says that savers will also need a “pensions dashboard health check” to understand the data and make sure they won’t undershoot what they will need.
The long-awaited pensions dashboard is (according to the latest reports) not that far away now.
The concept itself first mooted almost a decade ago, and the first prototype was demonstrated way back in April 2017. Since then, there have been regular reports of its imminent arrival… the latest one has a public launch date chalked in of 31 October 2026.
The tool is designed to help individuals see where all of their savings are lodged; and, with luck, be able to ascertain what they might be worth by the time they retire.
But a new report from the Social Market Foundation says that more might be needed to prevent the potential benefits being “squandered”.
Firstly, they say that, while the introduction of auto-enrolment in 2012 has successfully driven up the number of employees with pensions, the default contribution rate remains too low for many to accumulate adequate pension wealth.
Secondly, there are worries that many people may not have a clear understanding of what a given retirement income would mean for their individual circumstances… for example, whether they own or rent their home… and that many could also lack the knowledge or confidence to boost their savings should they need to do so.
To back up those concerns, new polling data shows that more than a quarter (27%) of those in full-time employment with a pension had either never checked their total pension savings, had not done so for a year or more… or didn’t know whether they had or not.
Other evidence from the Financial Conduct Authority’s Financial Lives Survey finds that a third of people currently contributing to a DC pension said that they are not confident they are able to manage their retirement savings.
So why do so many people not have a handle on their savings?
While procrastination certainly plays its part, not everyone understands how pensions work, say researchers: less than half (44%) of UK adults, for example, understand the impact of inflation on savings, and only 37% understand how compound interest builds savings
over time.
The Social Market Foundation is recommending the creation of a “pensions dashboard health check” scheme – giving personalised guidance to individuals who want further support with retirement planning and pension management.
While the dashboards are expected to lead to better-informed pension savers, without that help being available, they may not fully appreciate what the dashboard is telling them – and what it will mean for their lifestyle in retirement.
Crucially, even if some people see that they are not on track for an adequate retirement income, they might lack the knowledge or confidence to do what’s needed to put that right.
The proposed health checks would focus on explaining the value of pension saving, what an individual’s dashboard means for them, and the best ways in which they can improve their retirement prospects (e.g., increase contributions, consolidate small pots, etc).
Pension health checks could also direct those who need or want more extensive and bespoke support towards regulated financial advice.
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