Rumours abound that the government has shelved dashboard plans. If the industry wants to engage younger workers it must pick up the mantle - and fast
On the day I turned 30 I sat down and counted the number of different jobs I’ve had in my lifetime…
Why mention this? Because it’s incredibly relevant to a major policy that’s seemingly under threat.
I am, of course, talking about the Pensions Dashboard. Despite industry action, consumer desire and cross-party support, rumours abound that the dashboard might be dead in the water.
The story, first reported in The Times, is that secretary of state for work and pensions, Esther McVey, is planning to can the project - convinced that the service shouldn’t be provided by the state and would distract from the roll out of universal credit.
This move is a hammer blow for savers, and shows serious government contempt for younger workers.
The figure often touted by the industry is that people will have 11 jobs (and thus pensions pots) in a lifetime. But when it comes to the younger generations, it seems that this figure is way off.
That’s 29 jobs and 29 pension pots - an awful lot to keep track of
As I trawled through my employment history, I discounted the five jobs I worked before, during and post university, on the ground that they wouldn’t have qualified me for auto-enrolment even had it been fully rolled out.
Those aside, I’ve had five jobs so far that met the criteria for automatic enrolment. That’s five job in eight years. Assuming I work until I’m 68 (state pension age) and continue to move around, that means I’d have another 24 jobs. That’s 29 jobs and 29 pension pots - an awful lot to keep track of, I’m sure anyone would agree.
Except things are even more complicated than that.
I’m freelance and thus self-employed, just like 4.8 million other people. Approximately 15.1 per cent of the UK working population. And self-employment is sky rocketing among younger workers. ONS data found that 16 to 24 year old category, increased from 104,000 to 181,000 between 2001 and 2016.
This means that as well as my five qualifying pensions pots from full time jobs, I also have several contractor gigs for which I may or not qualify. One, in particular, I have been auto-enrolled in only now that I have stopped working for the company. It’s not clear whether I’ll get back-dated contributions on my previous earnings, which should have qualified.
6.6 million people don’t know where their savings are
If not, I suppose that’s a pension scheme I’m enrolled in that will sit empty of contributions. Will I pay platform fees? None of this is clear.
I also have companies I’ve worked with more than once where I subsequently have two pension pots, with the same provider, via the same company, but separate.
And I’ve moved house at least three times, and utterly forgotten to update my providers.
In a nutshell, I have no idea how many pots I have, where they all are, or how much is in each. And I edit a pensions magazine. So if I can’t work it out, what chance does any other 30 year old - who is far less likely to care in the first place - have?
The many-pot situation is a catastrophe. It kills engagement, makes at-retirement decisions dangerous and introduces tax complexities that is enough to make anyone’s head spin.
And the risk of lost savings is high.
Figures from Aegon demonstrate this clearly. They estimate that 62% of us have multiple pensions. Of those, 21% have lost track of some or all of their pots. That’s 6.6 million people who don’t know where their savings are.
Australia has tackled a similar problem. The Tor Financial and Insurance Ireland report explains: “The lack of a unique identifier for members of the Australian superannuation scheme resulted in thousands of lost accounts, a problem which has been rectified by using an individual’s tax file number.
If you don’t know how much you’ve saved, how can you ever know how much more you need
“Tax Office runs the SuperSeeker site which tracks down lost accounts and picks up enquiries if an employer fails to pay contributions.”
Clearly, a dashboard could do a similar job and help transform the savings journeys of young people in the UK.
And without one, it’s hard to see how we’ll get people to save enough. After all, the industry has individually designed several whizzy dashboards that show you how each of your pots is doing, and how far you are from saving enough, but when applied to 1/29th of someone’s total savings, you’re always going to look terrifyingly short of the mark.
And if you don’t know how much you’ve saved, how can you ever know how much more you need to put away to get to where you need?
What does it mean for schemes
Perhaps the biggest problem is that if the dashboard is indeed shelved, it’s not just the government who will take the reputational hit. Young savers will rightly assume that the industry doesn’t care about them either.
Fortunately, government apathy doesn’t have to mean industry apathy too. The dashboard venture was never supposed to be funded by government and the tools and technologies are there. Origo has now successfully tested the technology to accommodate an anticipated 15 million users.
The industry needs to pull together to make a dashboard happen, whether Esther McVey is on board or not.
For schemes and trustees, this means getting your data in order, working with dashboard providers to see how your scheme can get involved, and committing to helping your members understand their pension positions.
Mastertrusts and GPPs in particular have a huge role to play here. If the biggest schemes can commit it will mean that dashboards quickly become useful.
Of course, the biggest problem is how to get all the schemes involved, even the tiny DB ones, and here regulation would be helpful. But it would be a far smaller ask to get the government to legislate that schemes must provide data to a dashboard, if one exists in the first place.
The industry is notoriously siloed, but this is one issue where working together could make all the difference.
The next step - more consumer choice
The many pots problem is compounded by the fact that the UK has one of few systems in the world where savers have no control over where their money goes.
Taken collectively, the situation is far more pernicious than it might seem.
First, it disengages savers from pensions – if you have no say in who takes care of your money, you’re less likely to trust the system.
Secondly, it creates a communications gap, as asset managers don’t need to impress members to make sales.
In Australia, savers can choose between corporate funds, industry superannuation funds, public sector funds and retail funds.
In New Zealand, savers can choose their KiwiSaver provider from a list.
A dashboard would help show the scale of the problem - but without pot-follows-member or easy choices, seeing your pensions in one place doesn’t help having loads that are difficult to combine.
Of course, the private sector is already making moves here. Companies such as PensionBee allow people to simply aggregate old pots.
The question is, do we really want workplace pension shifting into the less well-governed retail sector? Unless we come up with better solutions ourselves, we may not have a choice.