PENSIONS
Preparing for pensions dashboards
Julie Yates, director of pensions administration at Cartwright, explains how government plans to introduce pensions dashboards are progressing and the steps employers should be taking now to prepare for them
I n October 2022, “regulations to enable millions of UK savers to access their pensions information at the touch of a button” were laid before parliament, with the promise that pensions dashboards will “transform how savers access their pensions facts and figures”. According to the Money and Pension Service, “Pensions dashboards will enable individuals to access their pensions information online, securely and all in one place, thereby supporting better planning for retirement. Dashboards will provide clear and simple information about an individual’s multiple pension savings, including their state pension. They will also help them to reconnect with any lost pension pots.” This is an ambitious objective and fair to say one which, for many, will be entirely accurate if – and when – the dashboard materialises. Who will be connected to the dashboard? If you’re a member of a pension scheme with less than 100 ‘relevant members’ you are out of scope for mandatory connection and instructed to await any future regulations, for which no date has been set. A relevant member as described by The Pensions Regulator (TPR) is an active, deferred (when a member leaves
pensionable employment or decides to opt out of the scheme) or a pension credit member. Members who are already receiving benefits (pensioners) or whose benefits have been cashed in to provide a tax-free lump sum, purchase an annuity or drawdown income are not classed as relevant members. But how are you to even know if you’re in a scheme with less than 100 relevant members? Presumably only when things don’t materialise. So, is size everything? The simple answer is, no. There are many sayings around size; size isn’t everything, it’s the little things that count, if you look at the big picture, you start losing your focus on the little things, etc. According to statistics from TPR, there are around 39,000 relevant members who are members of a pension scheme with less than 100 relevant members. The Pensions Dashboard Programme will be launched to millions of people, but that doesn’t make not reaching 39,000 any less significant when it comes to adequate planning for retirement. And it’s important to remember, just because scheme membership is small doesn’t mean an individual’s pension entitlement is also small. On the contrary, most of these schemes are related to the good old days
of final salary pension schemes and when a job was for life. Longevity in service equals a sizeable pension and even if it were a small pot, it still matters because it is still someone’s savings. An example of this could be a pension scheme with less than100 relevant members. One member has a deferred pension at date of leaving of £333.33 per annum and another has a deferred pension at date of leaving of £66,750.00 per annum. You would hope, of course, that the member with the higher pension will look at their pensions dashboard information and recognise that a pension from a previous employer is missing and contact the pensions administrator. However, even at the lower end of the scale, every penny is important. And the bigger question is – how can members adequately prepare and plan if they don’t have the full picture? According to TPR, the average worker will build up 11 different pension pots over the course of their career, and keeping track of them all can be difficult. As a result, around £26.6 billion is sat in ‘lost’ pensions across the UK.
Are employers ready for dashboards?
The likelihood is, if the dashboard does its job, it will spark interest in pensions. What
| Professional in Payroll, Pensions and Reward | October 2024 | Issue 104 58
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