Personal Pension  

Keep all nest eggs in the one basket

Today’s worker has, according to Department for Work and Pensions modelling, an average of 11 jobs in a career. And 25 per cent of us will have 16 or more jobs. If we are automatically enrolled into each of these, we will have very fragmented pensions. With the old system of annual benefit statements, we could be getting one annual statement every three or four weeks, but each only representing a tiny part of our pension. That would be a great volume of pretty useless communication, serving little purpose beyond keeping the local postman in a job.

With a pension dashboard, these will all be visible in one place, at the same time, with up-to date information.

While the benefits of a pensions dashboard to consumers are clear, the case is less obvious to pension providers. Some caution among providers is understandable – it is providers, not consumers, that have to meet the cost of delivering the dashboard, and if it disturbs an otherwise sleepy back- book then some of their business might walk away.

On the upside, though, there may be savings in not having to send out benefit statements and more engaged customers may be more likely to increase contributions or pay in lump sums. And if there is a feedback loop, with the dashboard able to tell providers what screens the consumer is looking at, then much improved targeting of pension increment marketing campaigns becomes possible.

Ultimately, it is consumer behaviour that will determine whether dashboards achieve wide coverage or not. If the concept is popular, then users will soon tire of non-participating schemes where they have to enter details manually and they will transfer those pots over to more modern providers.

There is much work to be done to get the concept up and running. Data protection is a major issue, and we need a set of protocols around how consumer permissions are asked for and how the data is used.

A greater challenge will be identifying consumers. It is not unusual for a consumer with three pension providers to have minor differences in the way each one of them has recorded their name. Even dates of birth and national insurance numbers may be wrong, as all too often these have been manually noted down at the outset of employment, and perhaps manually entered again onto the pension provider’s website at the moment of joining an employer’s pension scheme.