The government has confirmed that it intends to implement its proposed pensions dashboard initiative, which will allow those saving for retirement to view information from multiple pensions in one place.
According to the government, pensions dashboards will ‘open up pensions to millions’, and ‘provide an easy-to-access online view of a saver’s pensions’.
The Department for Work and Pensions (DWP) has confirmed that it intends to put forward primary legislation that will ‘require pension schemes to make consumers’ data available to them through their chosen dashboard’.
‘The government’s commitment to compel pension schemes to share data with platforms through primary legislation is particularly welcome,’ said Mike Cherry, National Chairman of the Federation of Small Businesses (FSB).
‘Some urgency is now required, and we question the three to four-year timeframe for schemes to prepare data for dashboards. Hopefully once the Brexit impasse is resolved we can move back to addressing more critical domestic issues like this one, not least the UK’s late payment crisis, the spiralling costs of doing business and a regressive business rates regime.’
From 9 January 2019, the government’s new ban on pensions cold-calling takes effect.
Making unsolicited calls in regard to pensions is now illegal, and any business found to be breaking the law will face fines of up to £500,000.
Data published by the Money Advice Service recently revealed that as many as eight scam calls are made every second in the UK, totalling 250 million unwelcome calls per year.
Meanwhile, research conducted by the Financial Conduct Authority (FCA) suggested that pension scammers stole an average of £91,000 per victim in 2018.
Commenting on the ban, John Glen, Economic Secretary to the Treasury, said: ‘Pension scammers are the lowest of the low. They rob savers of their hard-earned retirement and devastate lives. We know that cold-calling is the pension scammers’ main tactic, which is why we’ve made them illegal.
‘If you receive an unwanted call from an unknown caller about your pension, get as much information you can and report it to the Information Commissioner’s Office (ICO).’
The ICO website can be accessed here.
Prime Minister Theresa May has outlined her commitment to the launch of the so-called ‘Pensions Dashboards’ initiative.
The new Pensions Dashboards will enable workers to view their future retirement funds on their mobile phones and tablet computers.
A feasibility study on the development of hi-tech tools has been launched, with the stated aim of analysing how multiple pensions from different workplace and private schemes can be brought together in one place. This would allow savers to understand what income they can expect in retirement.
Pensions Minister Guy Opperman stated that the Pensions Dashboards initiative could ‘revolutionise’ the way in which workers prepare for retirement. He commented: ‘Having pensions information at the touch of a screen will ensure better-informed, more engaged savers and help many more people to plan effectively for retirement.’
Meanwhile, the Prime Minister said: ‘Bringing pensions online will transform retirement planning – giving people straightforward access to all their pension information in one place.
‘I welcome the industry’s commitment to make this new technology a reality.’
The first Pensions Dashboard is expected to go live in 2019.
A survey carried out by insurance firm Prudential has suggested that over half of self-employed workers would back plans to expand pensions auto-enrolment, or make pension saving compulsory.
According to the survey, 27% of those polled would support the expansion of pensions auto-enrolment to cover the self-employed, and an additional 27% would back compulsory pension saving.
The survey also revealed that 18% of self-employed workers ‘do not believe that pensions apply to them’, while 20% stated that they find pensions rules ‘very confusing’.
Furthermore, 28% of individuals surveyed reported that they will be reliant on the State Pension as their main source of retirement income.
Commenting on the survey, Vince Smith-Hughes, Head of Business Development at Prudential, said: ‘It is clear that the self-employed want help in saving for retirement and that the State Pension alone may not be enough for a comfortable retirement.
‘We believe it is important that the government works with the self-employed and the pensions industry to ascertain the most suitable option and put appropriate rules in place as soon as practicable.’
In a new report, the Treasury Committee has called for the government to reform tax relief on pensions.
The Committee reviewed the current state of UK household finances, and suggested that many households are presently ‘over-indebted’, and are without a ‘rainy day savings buffer’
According to the Treasury Committee, tax relief is ‘not an effective or well-targeted way of incentivising saving into pensions’. It has urged the government to give ‘serious consideration’ to replacing the lifetime allowance with a lower annual allowance, alongside introducing a flat rate of relief, and promoting tax relief as a bonus or additional contribution.
Within the report, the Committee also stated that a number of changes are ‘presenting new challenges to households saving for retirement’, including the ongoing transition from defined benefit to defined contribution pensions.
Commenting on the report, Nicky Morgan, Chair of the Treasury Committee, said: ‘Many households are facing challenges that are putting pressure on the health and sustainability of their finances. Over-indebtedness, lack of rainy day savings and insufficient pension savings are some of the weaknesses in the household balance sheet identified in this inquiry.
‘The Committee’s report makes a series of recommendations for the government to consider that would help households ensure that their finances are as resilient as possible.’
Research carried out by Which? has suggested that men get a ‘better state pension deal’ than women, with men receiving almost £29,000 more than women over the course of an average 20-year retirement.
The consumer group stated that ‘significant disparities persist’ in regard to the UK’s state pension gender gap, with the average man typically receiving £153.86 per week and the average woman receiving £125.98 a week.
However, the research also suggested that the state pension gender gap has narrowed slightly. In August of last year, the average state pension payment received by women equated to 81.9% of that received by men – a rise when compared to the figure of 79.7% recorded in August 2015.
Commenting on the research, Harry Rose, Money Editor at Which?, said: ‘Our evidence shows how variable people’s state pension payments still are. Many pensioners will be shocked by the differences in average payouts to men and women, and those qualifying under the old and new systems.’
A spokesperson for the Department for Work and Pensions (DWP) stated: ‘Around 650,000 women reaching state pension age in the first 10 years will receive an average of £8 per week (in 2015/16 earnings terms) more, due to the new state pension valuation of their national insurance record.’
A study commissioned by the Trades Union Congress (TUC) has revealed that volatility in the pensions market could cause those saving for retirement to lose up to £5,000 in their annual pension payments.
The Pensions Policy Institute (PPI) analysed historic investment returns on behalf of the TUC, and found that the size of an individual’s pension pot may vary by up to 40%.
As a result, a man who has been in a defined contribution pension scheme for 40 years, who earns a median wage, could earn an annual income of £16,804 if he were to retire in 2017. In 2000, the same worker would have been able to retire on an annual income of £27,871.
However, the research showed that, whilst the impact of investment returns on women’s pension savings is similar to that of men’s, women are more likely to be reliant on the state pension.
Commenting on the matter, Frances O’Grady, General Secretary of the TUC, said: ‘Someone who has saved all their working life should not have to play roulette with their pension fund. But if their retirement lands on a bad year, market volatility could leave them with a much poorer standard of living for the rest of their life.
‘Every saver should be enrolled into a well-governed scheme that is able to cushion members from the worst markets can throw at them.’