31 Jul 2020
Jennifer Summers, Communications Assistant at the Centre for Ageing Better gives her take on being in the know about financial security in your later years.
Although I’m sometimes reluctant to look at my bank account until payday, I always appreciate how easy it is to login and check my finances. Even before online banking, it was relatively easy to go to a bank and to look at monthly statements in the post.
The question is: why is it that I can do this with my current finances, but when I want to look at the financial security I’ll have in the future, I don’t have the same ability?
True, some information is available. Traditionally, pensions providers give you an annual statement, and more recently most have an online portal to check how the pot is growing. As a bit of a pensions geek, I really enjoy logging in and crunching the numbers but I highly doubt everyone thinks like this.
A typical worker is expected to have 11 different pension pots over their career and there are concerns that this could make it impossible to keep track. Despite my best efforts to keep a record of my pensions, I can’t imagine logging in to various portals and collating information on my pots to work out how much I should be getting in retirement.
The pensions sector has recognised this problem and have been developing the ‘pensions dashboard’ to help everyone track the progress on a centralised dashboard, much like how you can check a bank account.
This will automatically collate all your pension pots (even ones you might have forgotten about) to show how much you have saved in both Defined Contribution and Defined Benefit pensions, and look at how much State Pension you are entitled to. It will also give you an estimate of what this might be worth as a monthly income when you retire.
The Association of British Insurers have built a prototype for the dashboard and the industry are now waiting for DWP to publish a feasibility study to understand who is responsible for taking the project forward. There are significant administrative hurdles to accessing details of around 80 million pension pots from across the industry and government, but the aim is for the dashboard to be live in 2019.
When it is live, pensions will have overcome a huge hurdle to engagement by making money in pension pots as tangible and real as a bank account. Just like saving up for a holiday and making sure we can afford to go, we will be able to save up for our retirement and assess our pension pots to make sure we are able to make the transition into retirement and have a good later life.
Planning for later life is essential, however most people ignore thinking about it until it is too late. This is a big problem:
One in five adults who retired from 2012-17 admitted to finding transitioning into retirement difficult
About 1.9 million pensioners in the UK live in poverty, according to Government statistics
DWP estimated in 2014 that 11.9 million people below State Pension age were not saving enough to maintain their living standards into retirement.
Hopefully, the pensions dashboard will help make the financial aspect of planning that little bit easier.