The Work and Pensions select committee has criticised the government for failing to commit to a timetable for making state pension data available via pension dashboards.
In its report on pension costs and transparency, published August 5, the committee had set out a series of recommendations aimed at making information about consumers’ pensions more transparent and readily available.
In response the government agreed that state pension information should be made available via dashboards “in order to give people a comprehensive view of their pensions” but it failed to say when it planned to achieve this.
The government stated: “[The Department for Work and Pensions] is working with HMRC (HM Revenue & Customs) to develop the necessary digital architecture that will enable the provision of state pension data via dashboards.
“We will make this available at the earliest opportunity.”
The MPs have now said they were disappointed at the lack of a timetable for introducing this information.
They alleged that although the government had pushed for the industry to have its pensions data ready for the launch of pension dashboards, it was not committed to prepare its own data in time, highlighting that state pension projections were already available through Gov.uk.
Frank Field, chair of the Work and Pensions committee, said: “Why does the government insist on missing a trick like this?
"We clearly need a central, national, pensions ‘account’, that every individual could access not only to monitor directly how their own retirement savings and planning is shaping up, but also genuinely compare all the vying 'offers' to manage their savings.
“This requires that the dashboard has details of the size of the state retirement pensions.”
The new pension dashboards will ensure people throughout the UK have easy access to information about their pensions, who manages them, and what they are worth.
The government will introduce multiple pension dashboards, with the first one being developed by the government's new guidance body, the Money and Pensions Service.
Tom Selby, senior analyst at AJ Bell, said the dashboard will only work if all pension pots are included.
He said: “Given the state pension is the foundation upon which people build their retirement plans, it is critical the government makes this information available via dashboards as soon as possible.
“Without total coverage of people’s pensions, both state and private, the impact of the reforms and usefulness of dashboards in enabling better retirement decisions will be limited.
“Failure to do this would be a huge wasted opportunity and risk undermining the success of the entire project. It would also send an incredibly negative message to consumers and the pensions industry about the government’s own commitment to dashboards beyond positive words."
The committee’s report also recommended that pension funds should be obliged to disclose costs in a uniform template while also calling on the government to review the level and scope of the pensions charge cap.
In the report the committee said the government and regulators shouldn’t wait for the “industry to fail to act voluntarily as they have so many times in the past”, and should instead move now to legislate for mandatory disclosure to a set format, for both defined contribution and DB schemes.
The government has accepted both these recommendations, stating that it “accepts the Work and Pensions select committee’s analysis of the effect of flat fee charging structures on small pots, especially dormant pots, and as part of the review will give particular consideration to whether restrictions to the use of this charge structure in some circumstances is necessary to protect pension scheme members”.
Mr Selby said: “The auto-enrolment charge cap is ripe for review and in that context it makes sense to look at the application of certain charging structures too. Clearly the risk with flat fees is that small pots can be eroded to zero, which clearly isn’t a good outcome.
“More broadly, it is important workplace pension providers who are benefitting from economies of scale are encouraged to pass these on to savers.
“Even a small difference in charges can add thousands of pounds to the value of someone’s retirement pot over the long-term, and it is important the government doesn’t settle for 0.75 per cent in a world where inertia continues to dominate consumer behaviour.”
amy.austin@ft.com
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