The UK’s Department for Work and Pensions (DWP) plan to ‘kill off’ the pensions dashboard scheme has caught the industry by surprise, as the sector demands that the government stays on track with the project.
Esther McVey (pictured), who was appointed welfare secretary in January, has moved to kill the project that would help millions of people keep track of their pensions online, according to The Times newspaper.
She believes the project should be provided by the private sector and is seeking to ditch state efforts when the parliamentary summer recess begins.
The DWP has said reports that the pensions dashboard project would be scrapped are pure “speculation”. Despite the assurance, the industry remains cautious.
“If the Government does scrap the Pensions Dashboard it will be a huge blow to millions of savers. Many people already have defined contribution pensions from old jobs scattered across various different schemes, alongside bits of defined benefit entitlement and state pensions too,” Tom Selby, senior analyst at AJ Bell, said.
“There is also a broader issue here of trust between the Government and the pensions industry. It was the Government that told the industry it needed to develop a workable Pensions Dashboard model and deliver it by 2019. Huge amounts of time, effort and money have been dedicated by Association of British Insurers members to make that happen, with wide engagement from platforms, charities, advice firms and others.
“If the DWP is now going to pull the plug at the eleventh hour then the industry will legitimately question whether involvement in future such projects is really worth it.” (continues…)
Speculation on whether the pensions dashboard would ever be implemented grew as the DWP repeatedly having missed the deadline to publish its feasibility study. It is still slated to be introduced next year, even though there are no firm details about how it will work and who will serve as the gatekeeper.
“Following the arrival of auto-enrolment, I think that it’s crucial that we continue with the launch of the pensions dashboard. As people change jobs, which they do ever more frequently in today’s world, they are placed into a pension scheme chosen by their new employer because there is not the option for employee’s to request that money is paid into their existing plan.
This means that a new pot of money is created on which they need to keep tabs and it is highly unlikely that the employee will transfer across the accumulated sum from the previous plan as the value will be relatively low,” Elliott Silk, head of commercial at Sanlam UK, said.
Association of British Insurers (ABI) director general Huw Evans said losing government support could expose savers to scams.
“It is vital the Government stands by its promises on the pension dashboard. To abandon it would be a huge let down to millions of savers, leaving them unable to find the money they have saved and even exposing them to fraud.
This is an initiative with cross-party support, backed by consumer groups, which is a win-win for everyone. The pensions industry is committed to helping but we need Government involvement to ensure the system works fairly for everyone.”
The pensions dashboard is a system which would allow savers to view all of their pension savings, including the State Pension, in a single online place of their choosing.
“Given the success of auto-enrolment, which has created 9 million new workplace savers, and that the average worker will change jobs 11 times, this sort of tool is essential to help savers keep track of and manage their savings, and plan effectively for retirement,” ABI said.