The retirement strategy director at technology firm Dunstan Thomas said the dashboard could in future take on a much wider role than initially envisioned, as a considerable number of baby boomers expressed interest in using it as a planning tool.
The dashboard project was borne out of a need to create an overview of people’s pension savings following the pension freedom reforms in 2015, which gave all defined contribution savers free reign over their cash from age 55.
It was originally designed as an online portal facility that would enable all previous pension policies to be viewed in one place.
The project was given a boost in recent weeks when it received official government backing and responsibility for its delivery was transferred from HM Treasury to the Department of Work & Pensions.
The government plans to present a feasibility study on the dashboard in the spring, as outlined by pensions minister Guy Oppermann at a recent conference.
Pension savers already have access to the government's free at retirement guidance service Pension Wise, which will become part of a new guidance body amalgamating The Pension Advisory Service and the Money Advice Service early next year.
Despite this, Dunstan Thomas found widespread interest among baby boomers in using the dashboard for their retirement income and decumulation planning.
The firm carried out research among 1,002 baby boomers (aged 54 to 71) in the summer of this year.
About 22 per cent said they planned to use the dashboard to assess whether they have got enough in their pension pots to hit their retirement income target.
A further one in five wanted to use it to work out how much they could draw down monthly from their pension without running out of money too quickly.
Another group (15 per cent) planned to run comparisons between decumulation options, while others (13 per cent) wanted to work out how much they needed to set aside for an adequate long-term care pot.
Mr Boulding said: "These findings confirm our view that consumers will not take kindly to a dashboard that does not support post-retirement decumulation decision-making as well as pre-retirement accumulation and at-retirement decision-making.
"The line between pre- and post-retirement is irreversibly blurred and the pensions dashboard must reflect this."
Question: The government and pension industry are developing an online tool, a pensions dashboard, to be launched in 2019 that shows all your retirement savings at one glance. What would you use a pensions dashboard for?
N/A- I would not use a pensions dashboard |
|
41% | |
Understanding whether I’ve got enough in my pension pots to hit my retirement income target |
|
22% | |
Understanding what a specific monthly contribution increase into my core pension from now until anticipated retirement date will do to increase my retirement income |
|
12% | |
To work out how much I can drawdown monthly from my pension without running out of funds too quickly |
|
20% | |
To run comparisons between different decumulation options – income drawdown, annuity, taking it all out and putting into a savings account etc. |
|
15% | |
Understanding how much I need to set aside for Long Term Care |
|
13% | |
None of the above |
|
18% |
Mr Boulding said: "This understanding of what consumers will be using the pensions dashboard for is very valuable.
"It will help those planning to be dashboard providers to build the right interactive tools to help users to put this newly-available raw data to work to do some active planning."
A redesigned dashboard could also help alleviate some of the concerns around the lack of advice take-up among baby boomers.
Dunstan Thomas’ research found two-thirds of this age group have never consulted a regulated adviser despite being the early beneficiaries of pension freedoms.
The survey also revealed a persistent lack of understanding of retirement options in this age group, with a third (29 per cent) of baby boomers appearing to be baffled by the range of pension freedom choices.
Advisers too could benefit from the dashboard, Mr Boulding said, as it could prepare clients for adviser visits, in turn cutting their preparation time.
However, to achieve this the governance framework for the dashboard needs to include a robust and secure access framework for advisers with client permission, he said.
Under current plans, advisers will not be given access to the dashboard by proxy but it will allow information to be exported in some manner, as long as the consumer is present.
Ricky Chan, director at IFS Wealth and Pensions, said the dashboard could be used to educate clients about how much they need to save, the cost of deferring savings until a later age and inflation.
But he cautioned there could be complications because "these would undoubtedly be assuming the clients purchase an annuity when it is becoming a less favoured option in light of pensions freedom and it would be hard to compare different types of pensions."
For decumulation a "broad overview" of the options and tax implications could work to educate clients, with a referral process to the government’s Pension Wise guidance service thereafter, Mr Chan said.
He said: "Pension decumulation is too complicated, and the tax implications are significant. There are many limitations even with commercial software that clients need to be aware of, such as the assumptions used and potential legislation changes in future."
He said: "Overall, it'll depend on the costs of implementing and constantly updating the tool given that they'll need to reflect government legislation changes and tax changes.
"Also questions have to be asked about who will pay for these costs. Is there enough evidence that clients will indeed use these tools and understand them?
"At present many pension providers have these tools on their websites, but I’m unsure if clients even look at them."
Further stats from the baby boomer survey conducted by Opinium for Dunstan Thomas during June 2017:
30 per cent
...of 60 to 65-year-olds don’t know how much income they are likely to get in retirement, based on accessing all their assets.
34 per cent
...of 54 to 71-year-olds don’t know, or are not sure, how to work out how much income to draw out of their pension each month to avoid running out of money in-retirement (post-pensions freedom choices/compulsory annuity purchase).
10 per cent
...of 54 to 71-year-olds plan to use retirement tools/online calculator to help them work out how much they can take out each month to avoid running out of money in-retirement.
66 per cent
...of 54 to 71-year-olds have never used a regulated financial adviser.
31 per cent
...of 54 to 71-year-olds have never actively planned for their retirement.
19 per cent
...only began actively planning for retirement after a major life event (e.g. redundancy, ill health, receipt of inheritance/windfall).
68.4 per cent
...is the mean average percentage of total retirement income that Baby Boomers expect to get from their own state pension and personal pension pots combined.
carmen.reichman@ft.com
