A one-stop online shop for all pension schemes is being rolled out in Britain with the aim of greater transparency and ease of access to information for workers. Could a pensions dashboard work in Ireland, asks Paul King?
By 2019, Britain will have one of the most ambitious online pensions database with some 64m different pension pots on one platform. That’s the plan anyway, with a prototype (and some technical fine-tuning) under trial and gathering pace with the numbers opting into this new information highway.
The concept of a pensions dashboard is a spectacularly simplistic one. Essentially, it is a place where anyone with a pension will be able to log on and view their schemes, private, workplace and state-run, online. The technology will allow the consumer to learn their entitlements on one website – an information hub for pensions. The notion is so straightforward it is a wonder why it has taken the industry so long to reach even the precursor model they now have in the UK.
How will a pensions dashboard work?
The dashboard is an industry-led initiative. The Association of British Insurers is the driving force with around 17 pension firms involved, each having invested £50,000 (just over €56,000) to help build the prototype. Other key players include six technology firms, the British government and its financial regulators.
To access their pension information, consumers will have to register for the dashboard to attain a sign in. From there, they will be able to access a wealth of information on the platform from pension forecasts, to an estimated value of each pension scheme upon retirement and current spending. Annual statements will outline pension performance.
Britain’s new pensions minister, Guy Opperman, who was elected to the post in June, has called the dashboard project “revolutionary” because of its intentions to give the consumer a better understanding and engagement with their schemes.
Could it work in Ireland?
In short, yes. But only if we learn from Britain’s mistake in rolling out the platform. Generating information for the hub could have been made a whole lot easier if the dashboard had been rolled out in tandem with auto-enrolment. Although it has been in place since 2012 in the UK, not all workers are registered. By February of next year, however, British employers must have workers signed up for a new auto-enrolment service, where a portion of a person’s salary is paid into a pension pot, an incentive to promote and encourage saving towards a retirement scheme.
In September, Leo Varadkar, the Taoiseach, announced Ireland would venture into auto-enrolment territory. The mandatory contributions to a private pension scheme is one way to relieve demand on state pensions and encourage saving. Enforcement of the scheme in Ireland is expected in 2021.
Another issue is the cost of providing establishing the dashboard. There are far fewer providers in Ireland having to burden the cost of providing the funding for the platform. There are now just six life companies plus a handful of pension administrators providing services some with deeper pockets than others. Would there be Government sponsorship to fund such a programme?
The dashboard dilemma:
A dashboard, while unlikely to be compulsory, is a neat way for consumers to keep on top of their financial matters. With so much private data on one platform, however, the security and accuracy of all personal information must be top notch and an ongoing priority. Also, an issue for consideration is the responsibility of the validity of the total information provided. What if there are two Paul King’s in the one company and people are led to believe that they have a higher benefit at retirement than reality – where does the buck stop?
Then there is the issue of having too much information. If a person has had five different employers in their working life (the average in the UK is 11) and all of those old schemes are on a database for their perusal, there may be a tendency to put your financial adviser on the back-burner – what with all that information to hand why would you need someone to throw an independent eye over your pension pots?
That is exactly what you don’t want to do. Independent pension advice is and will remain key. Having an expert eye cast over all existing schemes, new and old, allows for better judgement in how these pots are managed and in their performance. And don’t get me wrong, for the independent adviser, a dashboard is also a good tool as it will make the reading of an individual or company scheme far easier with all the necessary information in one place.
Paul King is Acuvest’s Business Development and Client Manager. Paul can be contacted by email at firstname.lastname@example.org or by telephone 01 6344520 for company pension scheme advice which is jargon-free and easy to understand.
Acuvest is an independent pensions and advisory management business taking care of the futures of over 40,000 of our clients’ employees. For more market analysis and expertise follow Acuvest on Twitter @AcuvestIreland and Acuvest.ie for ongoing blogs and pension updates.