Pensions dashboard – Less dash, more of a stroll

In 2016, with little fanfare, the government introduced the concept of a pension dashboard. This announcement may have gone unnoticed by some, so here is an explanation of what it entails. 

The Pensions Dashboards Programme is responsible for designing and implementing the pensions dashboard ecosystem where, with a single registration, you will be able to access information about all your pensions. Better still, the information will be presented in a uniformed, easy-to-understand format, helping you to get a handle on how your retirement provisions are looking. 

Having worked in the industry for nearly 30 years, I know firsthand the challenges of tracking down clients’ pensions that they only half-remember. I recall leaving my first role at CIS in 2000 with a pension pot of about £3,000. If I had forgotten about this pot and left it invested in an MSCI World tracker, it would have grown by over 400% to just shy of £16,000! Imagine finding that windfall down the back of the sofa. (1) 

With the average adult holding nine different roles in their career, each potentially with its own pension scheme, and with 66% of adults holding multiple pensions, it’s likely that a significant number of pensions have been left dormant (2). Even whilst working at Equilibrium, I’ve had three different pension schemes, so it’s not just moving employer that will potentially establish a new pension. 

In 2018, it was estimated that there were over £19 billion in missing pension pots. By 2024, this figure had increased by a massive 60% to £31 billion. The push to locate these pensions has gained momentum, leading to the launch of National Pension Tracing Day on 27 October 2021, supported by many well-known pension providers. With an estimated 1 in 20 people missing out on pensions worth on average £9,500, the outcome of this initiative could make life changing difference to some. (3) 

Fast forward to today, and six Prime Ministers later, not much progress has been made until April of this year when Legal & General became the first pension provider to connect to the dashboard, marking a significant milestone. Furthermore, the Department for Work and Pensions has now set a ‘connect by’ date for each provider, with a regulatory deadline of 31 October 2026 for all to be connected. 

There’s clearly still a lot of work to be done to get all pension providers and third-party administrators connected to the dashboard. As of 2024, there are over 28 million members in defined contribution schemes, with only 10 million actively participating. (4) 

With many potentially benefiting from being reunited with their pensions, the next decision will be what to do with it. Should you leave it where it is to spread risk or consolidate it for ease of administration? Unfortunately, it’s not always as simple as this with a myriad of different charges, investment options and accessibility choices. This is where your financial planners’ expertise could prove key to making the right decision to make retirement planning less of a dash, and more of a stroll in the park.     

Sources

(1) FE Analytics 

(2) Financial Conduct Authority (FCA)- Financial Lives 2024 survey 

(3) www.nationalpensiontracingday.co.uk 

(4) The Pension Regulator